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CBRE Group (CBRE) Q2 Earnings & Revenues Beat, Decline Y/Y
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CBRE Group’s (CBRE - Free Report) second-quarter 2023 core earnings per share (EPS) of 82 cents surpassed the Zacks Consensus Estimate of 77 cents. The quarterly revenues of $7.72 billion also compared favorably with the Zacks Consensus Estimate of $7.56 billion. Results reflect growth in Global Workplace Solutions (“GWS”) and total growth in its resilient lines of business.
However, on a year-over-year basis, the core EPS declined by 55.2%, while revenues fell 0.7%. Despite growth in GWS and other resilient business, severely constrained capital availability affected its sales revenues.
Global leasing revenues too declined across all major property types. Amid the current interest rate environment, the pressure on sales and financing businesses, which are sensitive to commercial real estate capital flows, is expected to continue for the rest of the year.
Shares of CBRE have declined more than 2% so far today.
Net revenues decreased 6.8% (5.4% in local currency) year over year to $4.5 billion. Core EBITDA declined 45.2% (44.2% in local currency) to $504 million.
In the second quarter of 2023, CBRE completed four in-fill acquisitions for a total of $143 million in cash and deferred consideration. These included three in Advisory Services and one in the GWS business.
Quarter in Detail
CBRE Group’s Advisory Services segment reported a year-over-year revenue decrease of 21.1% (19.9% in local currency) to $2.04 billion. Our estimate for the same was $2.01 billion.
Global leasing revenues fell 16% (15% in local currency), reflecting declines across all major property types, most notably in office. This decrease was driven by the Americas, where revenues fell 22% (21% in local currency). Moreover, the foreign currency movement tempered growth in overseas markets.
Global sales revenues fell 44% (43% in local currency) amid much-constrained capital availability and difficult comparisons with the second quarter of 2022. Global mortgage origination revenues declined 44% (same in local currency) as most debt capital sources remained on the sidelines.
The GWS segment registered a year-over-year increase of 10.6% (12.1% in local currency) in revenues to $5.4 billion. Our estimate for the same was $5.33 billion.
With growth in both new and existing clients and the continued expansion of the local business, Facilities management net revenues increased 12% (14% local currency). Also, due to growth across the client base, markedly in the Turner & Townsend business, Project management net revenues rose 14% (16% local currency). Moreover, with significant growth from large first-generation outsourcers, the pipeline remained elevated.
The Real Estate Investments segment experienced a decline of 7.8% (6.7% in local currency) in revenues to $256 million. Our estimate for the same was $241.7 million. At the end of the second quarter of 2023, assets under management decreased by $1.3 billion from the first quarter of 2023 to $147.6 billion, reflecting lower market asset values.
Balance Sheet Position
CBRE Group exited the second quarter of 2023 with cash and cash equivalents of $1.26 billion, down from $1.32 billion as of Dec 31, 2022.
As of Jun 30, 2023, CBRE Group had $4.4 billion in total liquidity. This comprised $1.3 billion in cash in addition to the ability to borrow a total of $3.1 billion under its revolving credit facilities, net of any outstanding letters of credit. The company’s net leverage ratio was 0.79 as of the same date, significantly less than CBRE’s primary debt covenant of 4.25X.
During the June-end quarter, the company did not repurchase any shares. As of Jun 30, 2023, it had $2 billion of stock-repurchase capacity remaining under its authorized buyback program.
Outlook
For the full-year 2023, CBRE now projects core EPS to decline by 20 to 25% against the last year’s record level. The decline is mainly due to delayed capital markets recovery. However, it expects its resilient lines of business, in total, comprising the entire GWS business, loan servicing, property management, valuations and the asset management component of investment management, to grow for the full year at a rate in line with its prior projection.
Currently, CBRE Group carries a Zacks Rank #4 (Sell).
CBRE Group, Inc. Price, Consensus and EPS Surprise
It’s time to look forward to two stocks from the real estate operation industry — Jones Lang LaSalle Incorporated (JLL - Free Report) and Cushman & Wakefield plc (CWK - Free Report) . While Cushman & Wakefield is slated to report quarterly numbers on Jul 31, Jones Lang LaSalle is scheduled to come up with its figures on Aug 3, 2023.
The Zacks Consensus Estimate for Jones Lang LaSalle’s second-quarter 2023 EPS stands at $2.21, suggesting a year-over-year decrease of 50.7%. JLL currently carries a Zacks Rank of 5 (Strong Sell).
The Zacks Consensus Estimate for Cushman & Wakefield’s second-quarter 2023 EPS is pegged at 21 cents, implying a year-over-year decrease of 66.7%. CWK currently carries a Zacks Rank of 5.
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CBRE Group (CBRE) Q2 Earnings & Revenues Beat, Decline Y/Y
CBRE Group’s (CBRE - Free Report) second-quarter 2023 core earnings per share (EPS) of 82 cents surpassed the Zacks Consensus Estimate of 77 cents. The quarterly revenues of $7.72 billion also compared favorably with the Zacks Consensus Estimate of $7.56 billion. Results reflect growth in Global Workplace Solutions (“GWS”) and total growth in its resilient lines of business.
However, on a year-over-year basis, the core EPS declined by 55.2%, while revenues fell 0.7%. Despite growth in GWS and other resilient business, severely constrained capital availability affected its sales revenues.
Global leasing revenues too declined across all major property types. Amid the current interest rate environment, the pressure on sales and financing businesses, which are sensitive to commercial real estate capital flows, is expected to continue for the rest of the year.
Shares of CBRE have declined more than 2% so far today.
Net revenues decreased 6.8% (5.4% in local currency) year over year to $4.5 billion. Core EBITDA declined 45.2% (44.2% in local currency) to $504 million.
In the second quarter of 2023, CBRE completed four in-fill acquisitions for a total of $143 million in cash and deferred consideration. These included three in Advisory Services and one in the GWS business.
Quarter in Detail
CBRE Group’s Advisory Services segment reported a year-over-year revenue decrease of 21.1% (19.9% in local currency) to $2.04 billion. Our estimate for the same was $2.01 billion.
Global leasing revenues fell 16% (15% in local currency), reflecting declines across all major property types, most notably in office. This decrease was driven by the Americas, where revenues fell 22% (21% in local currency). Moreover, the foreign currency movement tempered growth in overseas markets.
Global sales revenues fell 44% (43% in local currency) amid much-constrained capital availability and difficult comparisons with the second quarter of 2022. Global mortgage origination revenues declined 44% (same in local currency) as most debt capital sources remained on the sidelines.
The GWS segment registered a year-over-year increase of 10.6% (12.1% in local currency) in revenues to $5.4 billion. Our estimate for the same was $5.33 billion.
With growth in both new and existing clients and the continued expansion of the local business, Facilities management net revenues increased 12% (14% local currency). Also, due to growth across the client base, markedly in the Turner & Townsend business, Project management net revenues rose 14% (16% local currency). Moreover, with significant growth from large first-generation outsourcers, the pipeline remained elevated.
The Real Estate Investments segment experienced a decline of 7.8% (6.7% in local currency) in revenues to $256 million. Our estimate for the same was $241.7 million. At the end of the second quarter of 2023, assets under management decreased by $1.3 billion from the first quarter of 2023 to $147.6 billion, reflecting lower market asset values.
Balance Sheet Position
CBRE Group exited the second quarter of 2023 with cash and cash equivalents of $1.26 billion, down from $1.32 billion as of Dec 31, 2022.
As of Jun 30, 2023, CBRE Group had $4.4 billion in total liquidity. This comprised $1.3 billion in cash in addition to the ability to borrow a total of $3.1 billion under its revolving credit facilities, net of any outstanding letters of credit. The company’s net leverage ratio was 0.79 as of the same date, significantly less than CBRE’s primary debt covenant of 4.25X.
During the June-end quarter, the company did not repurchase any shares. As of Jun 30, 2023, it had $2 billion of stock-repurchase capacity remaining under its authorized buyback program.
Outlook
For the full-year 2023, CBRE now projects core EPS to decline by 20 to 25% against the last year’s record level. The decline is mainly due to delayed capital markets recovery. However, it expects its resilient lines of business, in total, comprising the entire GWS business, loan servicing, property management, valuations and the asset management component of investment management, to grow for the full year at a rate in line with its prior projection.
Currently, CBRE Group carries a Zacks Rank #4 (Sell).
CBRE Group, Inc. Price, Consensus and EPS Surprise
CBRE Group, Inc. price-consensus-eps-surprise-chart | CBRE Group, Inc. Quote
Upcoming Releases
It’s time to look forward to two stocks from the real estate operation industry — Jones Lang LaSalle Incorporated (JLL - Free Report) and Cushman & Wakefield plc (CWK - Free Report) . While Cushman & Wakefield is slated to report quarterly numbers on Jul 31, Jones Lang LaSalle is scheduled to come up with its figures on Aug 3, 2023.
The Zacks Consensus Estimate for Jones Lang LaSalle’s second-quarter 2023 EPS stands at $2.21, suggesting a year-over-year decrease of 50.7%. JLL currently carries a Zacks Rank of 5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cushman & Wakefield’s second-quarter 2023 EPS is pegged at 21 cents, implying a year-over-year decrease of 66.7%. CWK currently carries a Zacks Rank of 5.