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5 Reasons to Add CBRE Group (CBRE) to Your Portfolio Now

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Shares of CBRE Group (CBRE - Free Report) have had an impressive run in the past three months, appreciating 26.6% compared with its industry's 5.2% growth.



This March, the company announced that it once again secured the top spot in the global rankings for commercial real estate investment sales for 2020. This, in fact, is the 10th consecutive year of CBRE Group securing the first position. The data is as per Real Capital Analytics. The company held the top spot in all three global regions — the Americas, Asia Pacific, and Europe, Middle East & Africa.

The fundamentals appear solid for this Zacks Rank #1 (Strong Buy) stock, which has a VGM Score of B. Moreover, there is enough scope for the stock’s price appreciation in the near term. Let’s now delve deeper into its strengths.

Reasons to Buy CBRE Group

Robust Scale: As the largest commercial real estate services and investment firm (based on 2020 revenue), CBRE Group enjoys a robust scale. It is among the few companies offering a full suite of services to multinational clients. Moreover, the company has grown organically and banked on strategic in-fill acquisitions to boost its service offerings and geographic reach. With an expanded capability to service, this company’s number of large clients has increased significantly over the past few years. As large corporations continue to seek consolidation of the number of service providers, CBRE Group is likely to remain a beneficiary of this trend.

Diversified and Contractual Revenue Base: CBRE Group has opted for a better-balanced and more resilient business model, in pursuit of which, it has shifted toward a more diversified and contractual revenue base in the past few years. This makes the company relatively resilient to market disruptions and positions it well to navigate even amid the current turbulence. In fact, enhanced resiliency has aided its performance even amid the pandemic. Particularly, though transaction revenues have been soft, broad diversification of both deal sizes and property types helped the company sail through the challenging times.

Occupiers Outsourcing Business: The company’s Global Workplace Solutions segment, which provides a broad suite of integrated, contractually-based services to occupiers of real estate, including facilities management, project management, transaction management and management consulting, is well poised to grow. Occupiers of real estate have been increasingly opting for outsourcing and depending on the expertise of third-party real estate specialists to achieve improvement in execution and efficiency. As a result, CBRE Group has been witnessing continued momentum from both new and existing customers. High-quality client base is bumping up contractual revenues. Also, GWS serves clients across a wide array of property types and industries, including many deemed essential during the current crisis. Moreover, its pipeline is weighted toward logistics, technology and life sciences & health care.

Balance Sheet Strength and High ROE: The company enjoys ample liquidity and low leverage level. Particularly, as of Dec 31, 2020, it had $4.6 billion of total liquidity. This comprised $1.8 billion in cash, in addition to the ability to borrow a total of $2.8 billion under its revolving credit facilities, net of any outstanding letters of credit. CBRE Group’s net leverage ratio was 0.21x as of the same date. This is below the company’s primary debt covenant of 4.25x. Notably, it is deploying capital for internal investments and actively evaluating a steadily increasing merger and acquisition pipeline as it starts to see strategic opportunities. Furthermore, CBRE Group’s return on equity is 16.93% compared with the industry average of 2.48%. This shows that the company reinvests more efficiently than the industry.

Estimate revisions: The upward trend in earnings estimate revisions for the current year indicates a favorable outlook for the company. The Zacks Consensus Estimate for 2021 earnings per share has been revised 13.5% upward in two months’ time. Given its progress on fundamentals and positive estimate revisions, the stock is likely to keep performing well in the quarters ahead.

Other Key Picks

Brookfield Asset Management Inc. (BAM - Free Report) carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for its ongoing-year earnings has been revised 6.8% upward to $2.04 in two months’ time. The stock has rallied 17.6% in the past three months.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Colliers International Group Inc. (CIGI - Free Report) currently carries a Zacks Rank of 2. The consensus estimate for 2021 earnings moved 4.7% upward to $5.11 over the past 60 days. The company’s shares have gained 20.4% over the past three months.

FirstService Corporation’s (FSV - Free Report) earnings estimate for the current year moved nearly 1% north to $3.71 over the past 60 days. Shares of this Zacks #2 Ranked company have appreciated 12.2% in three months’ time.

Zacks Names “Single Best Pick to Double”

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