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Neutral Stance on CBRE Group
On Aug 22, we reaffirmed our long-term Neutral recommendation on
CBRE Group Inc. ( CBG - Analyst Report) . The decision is based on improving global capital markets and occupier outsourcing businesses and the company’s incremental investments in its operating platform to capitalize on growing opportunities. However, the soft market conditions in the leasing business due to increased occupier concerns and weakness in economic activity remain headwinds. Why the Reiteration?
Due to the weak yen and soft market conditions, CBRE’s earnings per share came in at 31 cents per share, missing the Zacks Consensus Estimate by 3 cents. However, this was 15% higher year over year, attributable to improvements in the global capital markets and occupier outsourcing businesses.
CBRE has a broad range of real estate products and services, and an extensive knowledge of domestic and international real estate markets that enable it to operate as a single-source provider of real estate solutions. The company has a promising outsourcing business, backed by an increasing clientele.
Moreover, with ample availability of low-cost credit, property sales activities have increased as investors are looking for decent yield and this has helped the company experience significant growth in global property sales revenues. The company has also reaffirmed its full-year 2013 adjusted earnings per share guidance.
Yet, stiff competition from regional as well as international players remains a concern and an extensive development pipeline increases its operational risks. Therefore, our Neutral recommendation on the stock remains in place.
Over the last 30 days, the Zacks Consensus Estimate for 2013 remained unchanged at $1.44 per share while the Zacks Consensus Estimate for 2014 inched up 1.2% to $1.70 per share. The stock currently has a Zacks Rank #2 (Buy). Other Stocks to Consider
Other stocks worth considering in the related industry that are worth considering include FirstService Corporation that has a Zacks Rank #1 (Strong Buy) as well as HFF, Inc. ( HF - Snapshot Report) and Standard Parking Corporation , both carrying a Zacks Rank #2 (Buy).