3 Real Estate Operations Stocks Poised to Escape Industry Woes

Industry Overview - The Zacks Real Estate Operations industry includes companies providing leasing, property management, investment management, valuation, development services, facility management, project management, transaction, and consulting services, excluding real estate investment trusts (REITs) [3] - Economic trends, government policies, and geopolitical factors significantly influence the real estate market, affecting the industry's performance [3] Current Challenges - Geopolitical unrest, such as the Russia-Ukraine war and the Israel-Hamas conflict, is expected to negatively impact the industry's performance due to increased inflation and supply chain disruptions [4] - The pandemic has caused shifts in commercial real estate utilization, leading to cautious decision-making among clients regarding leasing and property purchases [5] Growth Opportunities - There is a growing trend of companies outsourcing their real estate needs, which presents opportunities for industry participants to enhance execution and efficiency [6] - Strategic investments in technology are crucial for companies to gain a competitive edge and improve client services [6] Industry Performance - The Zacks Real Estate Operations industry ranks 172, placing it in the bottom 31% of over 250 Zacks industries, indicating bleak near-term prospects [7] - The industry's earnings per share estimates have declined by 2.8% and 9% for 2024 and 2025, respectively, reflecting a loss of confidence among analysts [8] Stock Market Performance - Over the past year, the industry has advanced by 28.6%, outperforming the broader Zacks Finance sector's return of 23.7%, but underperforming the S&P 500's growth of 29.1% [10] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 17.87X, compared to the S&P 500's 22.62X and the Finance sector's 17.44X [12] - Historically, the industry has traded between a high of 32.49X and a low of 11.45X over the past five years, with a median of 17.86X [14] Company Highlights - CBRE Group: A commercial real estate services firm with a Zacks Rank of 2 (Buy). The 2024 EPS estimate has increased by 1.6% to $4.99, and shares have gained 16% over the past three months [17] - Jones Lang LaSalle (JLL): A leading full-service real estate firm with a Zacks Rank of 2. The 2024 EPS estimate has risen by 1.5% to $13.37, with shares appreciating 8.8% in the past three months [20] - Kennedy Wilson: A global real estate investment company with a Zacks Rank of 3 (Hold). The current-year EPS estimate has increased by 1.4% to $3.00, and shares have risen by 14.2% in the past six months [23]