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Is CBRE Group's (CBG) Q3 Earnings Likely to Disappoint?

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CBRE Group, Inc. is slated to report third-quarter 2016 results on Oct 27, 2016, before the market opens. Last quarter, this commercial real estate services and investment firm had delivered a 1.96% positive earnings surprise.

CBRE beat estimates in all of the trailing four quarters, with a positive average surprise of 6.73%. The Zacks Consensus Estimate for the third quarter is currently pegged at 48 cents.

Let’s see how things are shaping up for this announcement.

CBRE GROUP INC Price and EPS Surprise

 

CBRE GROUP INC Price and EPS Surprise | CBRE GROUP INC Quote

Factors to Consider

Los Angeles-based CBRE’s operations are spread over several countries across the globe. However, a number of large global economies and financial institutions continue to be impacted by the ongoing economic and financial issues worldwide. In fact, the recent referendum by the Britons to stay out of the European Union is likely to hit the company’s business adversely as it has substantial exposure to that region.

Further, unfavorable foreign currency movements and stiff competition from international, regional and local players remain major concerns.

Strategic in-fill acquisitions play a key role in expanding the geographic coverage and boosting the service offerings of CBRE Group. Also, the company opts for larger, transformational deals driven by macro policies. We believe these opportunistic acquisitions would serve as growth drivers, supplementing the company’s organic growth.

CBRE’s activities during the quarter could not gain adequate analyst confidence. Consequently, the Zacks Consensus Estimate for quarter remained unchanged at 48 cents over the last 60 days.

Earnings Whispers

Our proven model does not conclusively show that CBRE will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks ESP: The Earnings ESP, which represents the percentage difference between the Most Accurate Estimate of 47 cents and the Zacks Consensus Estimate of 48 cents, is -2.08%.

Zacks Rank: CBRE has a Zacks Rank #4 (Sell).

As it is we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are three other REITs that you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:

Ashford Hospitality Prime, Inc. , scheduled to release results on Nov 2, has an Earnings ESP of +9.76% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Armada Hoffler Properties, Inc. (AHH - Free Report) , slated to release earnings results on Nov 1, has an Earnings ESP of +4.17% and a Zacks Rank #3.

Post Properties Inc. , slated to release earnings results on Oct 31, has an Earnings ESP of +1.24% and a Zacks Rank #2.

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