JLL - I don't really understand their business model. They tout that revenues are up, but expenses are up even more, hence profits are falling.
After talking to someone to a spouse from a work colleague, who works for a privately owned competitor, it seems that they do a lot of planning work, without a clear mandate or contract from clients. They only get paid, if the client goes ahead with the proposed project and they also invest along with the client in some cases. She mentioned that JLL is a competitor and does the same thing.
I am not very sure what to make of this, but this seems to be a very volatile business, not worthy of a high multiple. Maybe the commission business is low margin and this type of add on is where the juice is. I don't know - I feel we need to have someone who understands the business better to make the case for investment or not. JLL stock was hit hard during the 2008/09 meltdown, but so where many others.
MMP results are stellar, compared to competitors. It seems to me that the pipeline infrastructure is getting overbuild and the volumes are not there to support all the new pipes coming online, which reduces the returns on invested capital. The well managed SEP for example showed shrinking operating profits on a 10% YoY increased asset base, EPD actually did worse, with shrinking operating profits, despite considerable investments in new projects. FWIW,EPD looks richly valued right now, even though I admit it is well managed and has a great LT track record.
CACC showed worsening credit metrics and decreased profitability on their new loans. I think they overearned during and after the financial crisis and now the profits are getting squeezed. |
