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Analyst Blog

On May 28, 2014, we issued an updated research report on the commercial real estate services and investment firm, CBRE Group Inc. (CBG - Analyst Report).

In late April, aided by higher revenues, CBRE reported first-quarter 2014 adjusted earnings of 25 cents per share, well ahead of the Zacks Consensus Estimate of 17 cents per share and up 56% year over year. The company experienced solid contributions from the acquisition of U.K.-based Norland Managed Services Ltd.

CBRE has a broad range of real estate products and services, and an extensive knowledge of domestic and international real estate markets. Moreover, strategic in-fill acquisitions as well as larger, transformational deals such as that of Norland play a vital role in enhancing the company’s geographic coverage as well as broadening its service offerings.

Moreover, improving property sales, leasing and outsourcing business augur well going forward. During the quarter, the company inked outsourcing contracts with international occupiers like Alibaba Group and Wipro Ltd. (WIT - Snapshot Report). Strategic investments in people and platform also stand good for the long-term perspective of this company and are expected to help in market share expansion.

Yet, regulatory limits on GSE lending, stiff competition from international, regional, and local players in the market as well as unfavorable foreign currency movement that impacts its top-line growth are our major concerns.

Over the last 30 days, the Zacks Consensus Estimate for full-year 2014 and 2015 moved north by 1.3% and 0.6% to $1.60 and $1.82, respectively. CBRE currently carries a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Investors interested in the real estate operations sector may consider stocks like HFF, Inc. (HF - Snapshot Report) and Reis, Inc. (REIS - Snapshot Report). Both these stocks sport the same rank as CBRE.

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