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What's in the Offing for CBRE Group (CBRE) in Q4 Earnings?
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CBRE Group, Inc. (CBRE - Free Report) , the global leader in real estate services, is gearing up to announce its fourth-quarter and full-year 2023 earnings on Feb 15 before the bell. The company has been at the forefront of the industry, offering a wide range of services, including property sales and leasing, property management, valuation, project management and consulting.
In the last reported quarter, this Dallas, TX-based commercial real estate services and investment firm reported an earnings surprise of 10.77%. Despite commercial real estate being under significant pressure in the fourth quarter, CBRE benefited from growth in its resilient lines of business, led by Global Workplace Solutions (“GWS”).
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 10.65%. The graph below depicts this surprise history:
CBRE Group is likely to have continued its focus on a better-balanced and more resilient business model during the fourth quarter, shifting the company’s business mix to a more contractual one. The broad diversification across property types, lines of business, geographic markets and clients and disciplined expense management are anticipated to have helped CBRE in the quarter under consideration.
However, geopolitical unrest and persistent macroeconomic uncertainties and the adverse impact on commercial real estate transactions are weighing on its profitability. With challenging capital market conditions amid high interest rates, many capital sources have tightened their underwriting standards, reducing credit availability. Under these circumstances, investors have either paused or reconsidered their buying decisions, causing a delay in the closing timeline for transactions. Also, a decline in both volume and the average deal size is likely to have hurt the company’s leasing business.
Collectively these factors are likely to have adversely impacted CBRE Group’s transaction-based businesses in the fourth quarter of 2023. Further, there is stiff competition from other industry players. These factors might have deterred the growth tempo to some extent.
Nevertheless, real estate occupiers, including corporations, public sector entities, healthcare providers and clients from various sectors, have been increasingly outsourcing their real estate needs. The growing demand for outsourcing services presents an opportunity for major industry players like CBRE to expand their client base and services. In the fourth quarter, CBRE Group is likely to have capitalized on such encouraging trends and experienced growth in the GWS segment.
Moreover, CBRE is focusing on technology investments to drive efficiency, deliver differentiated client services and gain market share. Embracing technology is likely to have helped the company navigate the current challenges.
Projections
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $8.62 billion. This suggests an increase of 5.13% year over year. The consensus estimate for fourth-quarter 2023 net revenues from Advisory Services stands at $2,378.11 million, indicating an 8.3% decline from the year-ago quarter’s $2,594.59 million. The consensus estimate for the GWS segment’s net revenues is pegged at $2,361.53 million, suggesting an increase of 12.8% from the year-ago quarter’s $2,093.02 million.
We estimate net revenues for the Advisory Services segment to fall 7.8% year over year for the quarter. Our estimate for quarterly net revenues for the GWS segment indicates an increase of 12.6% year over year. Moreover, we expect total revenues from Real Estate Investments to decline 7.3% year over year.
Before the quarterly earnings release, analysts do not seem optimistic about the company’s prospects as the Zacks Consensus Estimate for the October-December quarter’s earnings per share (EPS) has moved south a cent to $1.21 over the past week. It suggests a 9.02% decline year over year.
For 2023, we estimate net revenues for the Advisory Services segment to fall 16.1% year over year. Our estimate for 2023 net revenues for the GWS segment indicates an increase of 13.3% year over year. Moreover, we expect total revenues from Real Estate Investments to decline 13.5% year over year.
For the full year, the Zacks Consensus Estimate for EPS has been revised a cent downward in the past month to $3.69. The figure indicates a 35.15% decrease year over year, while revenues are projected to grow 2.55% year over year to $31.61 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict an earnings surprise for CBRE Group this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here.
CBRE Group currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of +4.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Upcoming Releases
It’s time to look forward to two stocks from the real estate operation industry — Newmark Group, Inc. (NMRK - Free Report) and eXp World Holdings, Inc. (EXPI - Free Report) . Both Newmark Group and eXp World Holdings are slated for its earnings release on Feb 22.
The Zacks Consensus Estimate for Newmark Group’s 2023 EPS stands at $1.05, suggesting a year-over-year decrease of 29.53%. NMRK currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for eXp World Holdings’ 2023 EPS is pegged at 6 cents, implying a year-over-year decrease of 40.0%. EXPI currently carries a Zacks Rank of 3.
As CBRE Group prepares to release its fourth-quarter 2023 earnings, it faces a challenging landscape shaped by elevated interest rates and macroeconomic uncertainty. However, the increasing trend of outsourcing real estate needs and investments in technology can provide CBRE with growth opportunities in these uncertain times. Investors should closely monitor these factors and the company's strategies to adapt to evolving market conditions and capitalize on emerging opportunities.
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What's in the Offing for CBRE Group (CBRE) in Q4 Earnings?
CBRE Group, Inc. (CBRE - Free Report) , the global leader in real estate services, is gearing up to announce its fourth-quarter and full-year 2023 earnings on Feb 15 before the bell. The company has been at the forefront of the industry, offering a wide range of services, including property sales and leasing, property management, valuation, project management and consulting.
In the last reported quarter, this Dallas, TX-based commercial real estate services and investment firm reported an earnings surprise of 10.77%. Despite commercial real estate being under significant pressure in the fourth quarter, CBRE benefited from growth in its resilient lines of business, led by Global Workplace Solutions (“GWS”).
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 10.65%. The graph below depicts this surprise history:
CBRE Group, Inc. Price and EPS Surprise
CBRE Group, Inc. price-eps-surprise | CBRE Group, Inc. Quote
Factors at Play
CBRE Group is likely to have continued its focus on a better-balanced and more resilient business model during the fourth quarter, shifting the company’s business mix to a more contractual one. The broad diversification across property types, lines of business, geographic markets and clients and disciplined expense management are anticipated to have helped CBRE in the quarter under consideration.
However, geopolitical unrest and persistent macroeconomic uncertainties and the adverse impact on commercial real estate transactions are weighing on its profitability. With challenging capital market conditions amid high interest rates, many capital sources have tightened their underwriting standards, reducing credit availability. Under these circumstances, investors have either paused or reconsidered their buying decisions, causing a delay in the closing timeline for transactions. Also, a decline in both volume and the average deal size is likely to have hurt the company’s leasing business.
Collectively these factors are likely to have adversely impacted CBRE Group’s transaction-based businesses in the fourth quarter of 2023. Further, there is stiff competition from other industry players. These factors might have deterred the growth tempo to some extent.
Nevertheless, real estate occupiers, including corporations, public sector entities, healthcare providers and clients from various sectors, have been increasingly outsourcing their real estate needs. The growing demand for outsourcing services presents an opportunity for major industry players like CBRE to expand their client base and services. In the fourth quarter, CBRE Group is likely to have capitalized on such encouraging trends and experienced growth in the GWS segment.
Moreover, CBRE is focusing on technology investments to drive efficiency, deliver differentiated client services and gain market share. Embracing technology is likely to have helped the company navigate the current challenges.
Projections
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $8.62 billion. This suggests an increase of 5.13% year over year. The consensus estimate for fourth-quarter 2023 net revenues from Advisory Services stands at $2,378.11 million, indicating an 8.3% decline from the year-ago quarter’s $2,594.59 million. The consensus estimate for the GWS segment’s net revenues is pegged at $2,361.53 million, suggesting an increase of 12.8% from the year-ago quarter’s $2,093.02 million.
We estimate net revenues for the Advisory Services segment to fall 7.8% year over year for the quarter. Our estimate for quarterly net revenues for the GWS segment indicates an increase of 12.6% year over year. Moreover, we expect total revenues from Real Estate Investments to decline 7.3% year over year.
Before the quarterly earnings release, analysts do not seem optimistic about the company’s prospects as the Zacks Consensus Estimate for the October-December quarter’s earnings per share (EPS) has moved south a cent to $1.21 over the past week. It suggests a 9.02% decline year over year.
For 2023, we estimate net revenues for the Advisory Services segment to fall 16.1% year over year. Our estimate for 2023 net revenues for the GWS segment indicates an increase of 13.3% year over year. Moreover, we expect total revenues from Real Estate Investments to decline 13.5% year over year.
For the full year, the Zacks Consensus Estimate for EPS has been revised a cent downward in the past month to $3.69. The figure indicates a 35.15% decrease year over year, while revenues are projected to grow 2.55% year over year to $31.61 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict an earnings surprise for CBRE Group this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here.
CBRE Group currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of +4.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Upcoming Releases
It’s time to look forward to two stocks from the real estate operation industry — Newmark Group, Inc. (NMRK - Free Report) and eXp World Holdings, Inc. (EXPI - Free Report) . Both Newmark Group and eXp World Holdings are slated for its earnings release on Feb 22.
The Zacks Consensus Estimate for Newmark Group’s 2023 EPS stands at $1.05, suggesting a year-over-year decrease of 29.53%. NMRK currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for eXp World Holdings’ 2023 EPS is pegged at 6 cents, implying a year-over-year decrease of 40.0%. EXPI currently carries a Zacks Rank of 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Conclusion
As CBRE Group prepares to release its fourth-quarter 2023 earnings, it faces a challenging landscape shaped by elevated interest rates and macroeconomic uncertainty. However, the increasing trend of outsourcing real estate needs and investments in technology can provide CBRE with growth opportunities in these uncertain times. Investors should closely monitor these factors and the company's strategies to adapt to evolving market conditions and capitalize on emerging opportunities.