3 Beaten-Down Real Estate Stocks That Look Cheap
The real estate market is expected to see significant growth in the near term with technological advancements and organizations revamping their operations from offices. Given this scenario, we think beaten-down...
The real estate market is expected to see significant growth in the near term with technological advancements and organizations revamping their operations from offices. Given this scenario, we think beaten-down real estate stocks Jones Lang LaSalle (JLL), Comstock Holding Companies (CHCI), and Forestar Group (FOR), which currently look cheap, could be ideal buys now. Read below to find out more.
The outbreak of the COVID-19 pandemic acted as a massive restraint for the real estate market, as the need for services offered by these establishments declined due to restrictive measures imposed by the government and the complete closure of commercial activities.
However, analysts are bullish on the industry's long-term prospects. The global real estate market is expected to grow at a CAGR of 9.6% to reach $5.39 trillion in 2026.
With digitization stepping into the real estate industry, digital house hunting has gained traction with consumers purchasing or mortgaging homes through virtual capabilities like 3D tours and drone videos.
Additionally, the growing demand for single-family owned houses and organizations resuming operations with work from the office should bolster this industry's growth.
Given the backdrop, beaten-down real estate stocks Jones Lang LaSalle Incorporated (JLL), Comstock Holding Companies, Inc. (CHCI), and Forestar Group Inc. (FOR) that currently seem to be trading at a discount, could be ideal buys now.
Jones Lang LaSalle Incorporated (JLL)
JLL, a professional services company, provides real estate and investment management services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
JLL's revenue increased 18.9% from the prior-year quarter to 4.80 billion in the fiscal quarter ended March 31, 2022.
Net income for the quarter came in at 145.60 million, reflecting an increase of 41.4% year-over-year, while its adjusted EBITDA stood at $273.60 million, up 43.9% from the prior-year quarter.
The company's adjusted EPS was $3.47, up 65.2% from the prior-year quarter.
Analysts expect JLL's EPS for the fiscal quarter ending June 2022 to come in at $4.44, indicating an increase of 5.7% year-over-year. Also, the company's EPS is expected to grow 3.1% year-over-year to $20.08 in the current fiscal year.
It has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.
In terms of its forward non-GAAP P/E, JLL is currently trading at 7.76x, 74.1% lower than the industry average of 29.92x. Its trailing-12-month Price/Sales multiple of 0.67 is 87.5% lower than the industry average of 5.35.
JLL's stock has slumped 42.2% year-to-date to close the last trading session at $155.76.
JLL's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, translating to Buy in our proprietary ratings system.
The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
JLL also has a B grade in Growth and Value. It is ranked #1 of 44 stocks in the Real Estate Services industry.
Beyond what is stated above, we've also rated JLL for Momentum, Stability, Sentiment, and Quality. Get all the JLL ratings here.
Comstock Holding Companies, Inc. (CHCI)
CHCI develops, operates, and manages mixed-use and transit-oriented properties primarily in the Washington, D.C. metropolitan area. The company also provides real estate development and management services.
On June 13, CHCI announced the completion of two significant transactions with CP Real Estate Services, LC; an entity owned by Christopher Clemente, Comstock's CEO, that are expected to strengthen its balance sheet and position the company for future growth.
The first transaction involves the redemption of outstanding shares at a discount, while the second transaction represents the replacement and modification of the company's asset management agreement.
CHCI's revenue increased 27.6% year-over-year to $8.73 million in the fiscal first quarter of 2022. Its income from operations grew 208.1% from the year-ago value to $1.37 million, while its net income improved 416.4% year-over-year to $2.01 million.
The company's net income per share increased 340% from its year-ago value to $0.22.
In terms of its trailing-12-month Price/Sales, CHCI is currently trading at 1.15x, 78.5% lower than the industry average of 5.35x. Its trailing-12-month EV/EBIT multiple of 8.13 is 80.8% lower than the industry average of 42.28.
The stock has slumped 5.2% year-to-date to close the last trading session at $4.60. However, it gained 12.3% over the past month.
CHCI's sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system.
The company also has a B grade in Value, Momentum, Sentiment, and Quality. The stock is ranked #5 in the Real Estate Services industry. To get CHCI's ratings for Stability and Growth, click here.
Forestar Group Inc. (FOR)
FOR operates as a residential lot development company in the United States. It acquires land, develops infrastructure for single-family residential communities, and sells its residential single-family finished lots to homebuilders.
For the fiscal quarter ended March 31, 2022, FOR's revenues increased 46.8% year-over-year to $421.60 million. The net income attributable to FOR grew 68.3% from the year-ago value to $47.80 million.
Moreover, its net income per share was $0.96, up 62.7% from the prior-year quarter.
Street expects FOR's revenue for the fiscal quarter ending June 2022 to improve 31.3% year-over-year to $410.93 million.
The consensus EPS estimate of $0.88 for the same quarter represents a 48% increase from the same period last year. FOR also beat the consensus EPS estimates in all the trailing four quarters.
In terms of its forward non-GAAP P/E, FOR is currently trading at 3.63x, 87.9% lower than the industry average of 29.92x. Its trailing-12-month EV/EBIT multiple of 5.62 is 86.7% lower than the industry average of 42.28.
The stock has slumped 38.1% year-to-date to close the last trading session at $13.46.
FOR has an overall rating of B, translating to Buy in our proprietary ratings system. The stock is rated A in Growth and Sentiment and a B in Value. In the same industry, it is ranked #4. Click here to see additional POWR Ratings for Quality, Momentum, and Stability for FOR.
JLL shares closed at $167.02 on Friday, up $11.26 (+7.23%). Year-to-date, JLL has declined -37.99%, versus a -22.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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