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On Mar 15, 2013, we reiterated our long-term recommendation on CBRE Group Inc. (CBG - Analyst Report) at Neutral. This reflects the company’s dedicated effort toward successful execution of strategic initiatives, which helped it bounce back in the fourth quarter of 2012. However, stiff competition from regional as well as international players remains a matter of concern.

Why Neutral?

CBRE Group’s broad range of real estate product and services, an extensive knowledge of domestic and international real estate markets as well as its hard-to-replicate intellectual capital and technology resources helped it realize superior performances in 2012. This provided a competitive edge to the company over its competitors and helped it achieve a growth of 10% year over year in revenues in 2012.

Americas region remained the major revenue growth driver with surge in leasing and outsourcing revenues. Moreover, in the current quarter, CBRE Group bought the commercial real estate services businesses of Atlanta-based Resource Real Estate Partners LLC and TPA Realty Services LLC to boost its service offering in the southeast. Going forward, we believe that such strategic moves will help CBRE Group keep posting better results, boosting its overall financials.

Moreover, in 2012, according to its repositioning strategy, CBRE Group acquired a leading commercial and residential property consultant of London – EA Shaw. The acquisition marks CBRE Group’s second major investment made in UK last year. With the acquisition, CBRE Group strengthened its presence in the EMEA (Europe, Middle East and Africa) region.

CBRE Group came up with an impressive result in the fourth quarter of 2012, after performing disappointingly in the prior quarter. The company’s adjusted earnings of 55 cents per share surpassed the Zacks Consensus Estimate by 6 cents. Also, earnings substantially exceeded the last quarter and prior-year quarter figure of 26 cents and 46 cents, respectively.

Following the strong 2012 results, CBRE Group expects adjusted earnings in the range of $1.40–$1.45 for full year 2013. Moreover, Management remains encouraged by the economic conditions of the U.S., and thus expects the Americas to remain the biggest growth driver going forward. Also, it expects CBRE Group to benefit from China’s economic condition, which improved recently, and the easing of credit-market tensions in Europe. Considering all these, management looks forward to witness solid revenues and earnings growth in 2013.

Following the release of the fourth quarter and full year 2012 results, the Zacks Consensus Estimate for full year 2013 remained unchanged at $1.42 per share with no estimates moving up or down. Also, the Zacks Consensus Estimate for full year 2014 stood same at $1.65 per share as no estimates were revised. With the Zacks Consensus Estimates remaining unchanged for both full year 2013 and 2014, CBRE Group now has a Zacks Rank #3 (Hold).

Other Stocks to Consider

REITs that are currently performing better include Simon Property Group Inc (SPG - Analyst Report), Alexandria Real Estate Equities, Inc. (ARE - Snapshot Report) and Cousins Properties Inc. (CUZ - Analyst Report). All these stocks carry a Zacks Rank #2 (Buy).

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