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Is a Beat in Store for CBRE Group (CBRE) in Q1 Earnings?
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CBRE Group, Inc. (CBRE - Free Report) , the global leader in real estate services, is gearing up to announce its first-quarter 2024 earnings on May 3 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 14.05%. Results reflected growth in its resilient lines of business, led by Global Workplace Solutions (“GWS”). However, commercial real estate capital markets were under significant pressure.
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 11.22%. The graph below depicts this surprise history:
In the first quarter, CBRE Group is likely to have benefited from its continued focus on a better-balanced and more resilient business model, shifting the company’s business mix to a more contractual one. 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.
The 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 first quarter, CBRE Group is likely to have capitalized on such encouraging trends and experienced growth in the GWS segment. Broad demand across clients, sectors and geographies is expected to drive its performance.
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. Ongoing cost reduction initiatives are expected to have aided in margin improvement.
However, geopolitical unrest, persistent macroeconomic uncertainties and a high interest rate environment’s 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 has hurt the company’s leasing business in the past quarters. Though a significant turnaround is likely to remain elusive, we expect a modest improvement in the Advisory Services segment in the first quarter.
Projections
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $8.07 billion. This suggests an increase of 8.9% year over year. The consensus estimate for first-quarter 2024 net revenues from Advisory Services stands at $1,929.47 million, which indicates a rise from the year-ago quarter’s $1,831.29 million.
The consensus estimate for the GWS segment’s net revenues is pegged at $2,345.39 million, which suggests an increase from the year-ago quarter’s $2,129.98 million.
Before the quarterly earnings release, analysts do not seem optimistic about the company’s prospects as the Zacks Consensus Estimate for the January-March quarter’s earnings per share (EPS) has moved south two cents to 69 cents over the past month. It suggests a 25% decline year over year.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts 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, which is the case here.
CBRE Group currently carries a Zacks Rank of 3 and has an Earnings ESP of +2.60%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks That Warrant a Look
Here are two other stocks from the real estate operations industry — Jones Lang LaSalle Incorporated (JLL - Free Report) and Newmark Group, Inc. (NMRK - Free Report) — you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.
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Is a Beat in Store for CBRE Group (CBRE) in Q1 Earnings?
CBRE Group, Inc. (CBRE - Free Report) , the global leader in real estate services, is gearing up to announce its first-quarter 2024 earnings on May 3 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 14.05%. Results reflected growth in its resilient lines of business, led by Global Workplace Solutions (“GWS”). However, commercial real estate capital markets were under significant pressure.
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 11.22%. 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
In the first quarter, CBRE Group is likely to have benefited from its continued focus on a better-balanced and more resilient business model, shifting the company’s business mix to a more contractual one. 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.
The 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 first quarter, CBRE Group is likely to have capitalized on such encouraging trends and experienced growth in the GWS segment. Broad demand across clients, sectors and geographies is expected to drive its performance.
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. Ongoing cost reduction initiatives are expected to have aided in margin improvement.
However, geopolitical unrest, persistent macroeconomic uncertainties and a high interest rate environment’s 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 has hurt the company’s leasing business in the past quarters. Though a significant turnaround is likely to remain elusive, we expect a modest improvement in the Advisory Services segment in the first quarter.
Projections
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $8.07 billion. This suggests an increase of 8.9% year over year. The consensus estimate for first-quarter 2024 net revenues from Advisory Services stands at $1,929.47 million, which indicates a rise from the year-ago quarter’s $1,831.29 million.
The consensus estimate for the GWS segment’s net revenues is pegged at $2,345.39 million, which suggests an increase from the year-ago quarter’s $2,129.98 million.
Before the quarterly earnings release, analysts do not seem optimistic about the company’s prospects as the Zacks Consensus Estimate for the January-March quarter’s earnings per share (EPS) has moved south two cents to 69 cents over the past month. It suggests a 25% decline year over year.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts 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, which is the case here.
CBRE Group currently carries a Zacks Rank of 3 and has an Earnings ESP of +2.60%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks That Warrant a Look
Here are two other stocks from the real estate operations industry — Jones Lang LaSalle Incorporated (JLL - Free Report) and Newmark Group, Inc. (NMRK - Free Report) — you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.
Jones Lang LaSalle is slated to report quarterly numbers on May 6. JLL has an Earnings ESP of +3.29% and carries a Zacks Rank of 3 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Newmark Group is scheduled to report quarterly numbers on May 3. NMRK has an Earnings ESP of +3.23% and a Zacks Rank of 2 presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.