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5 Reasons to Add CBRE Group Stock to Your Portfolio Now
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CBRE Group’s (CBRE - Free Report) wide array of real estate products and services offerings, healthy outsourcing business, strategic buyouts, technology investments and solid balance sheet are expected to drive its performance.
Analysts also seem bullish on this stock, with the Zacks Consensus Estimate for CBRE Group’s current-year earnings per share (EPS) being revised 6% upward over the past three months to $4.75.
Shares of this Zacks Rank #2 (Buy) company have rallied 33.3% over the past three months, outperforming its industry’s growth of 15.4%. Given the strength of its fundamentals, there seems to be additional room for growth of this stock.
Image Source: Zacks Investment Research
Factors That Make CBRE Group a Solid Pick
Market-Leading Position & Resilient Business Model: CBRE, the largest commercial real estate services and investment firm (based on 2023 revenues), holds extensive knowledge of domestic and international real estate markets. This helps it enjoy a robust scale. A market-leading position gives it a competitive edge in navigating through any challenging situations and capitalizing on compelling opportunities.
Over the past few years, CBRE has opted for a better-balanced and more resilient business model. In pursuit of this, the company has shifted toward a more diversified and contractual revenue base, which enables it to tide over market disruptions and other economic uncertainties. Our estimate indicates CBRE’s total revenues to increase 10.9% and 12.2% year over year in 2024 and 2025, respectively.
GWS Segment Growth: With occupiers of real estate increasingly opting for outsourcing and relying on the expertise of third-party real estate specialists to optimize their operations, CBRE Group’s Global Workplace Solutions (“GWS”) segment is well-placed to benefit. With significant growth from large first-generation outsourcers, the GWS business pipeline remains elevated, offering CBRE Group scope for growth. For the second quarter of 2024, the GWS segment delivered double-digit net revenue growth. Our estimate indicates a year-over-year rise of 15.3% for the segment’s net revenues in 2024.
Strategic Acquisitions: To widen its global reach and expand and reinforce its service offerings, CBRE Group has been focusing on strategic in-fill acquisitions by acquiring regional or specialty firms as well as independent affiliates. The company opts for larger, transformational deals driven by macro policies. In the second quarter of 2024, CBRE completed five in-fill business acquisitions, including one in the Advisory Services segment and four in the GWS segment, for approximately $290.9 million in cash and non-cash consideration. These opportunistic acquisitions and strategic investments will likely serve as growth drivers, supplementing its organic growth.
Solid Technology Platform: The company’s technology platform helps it develop and deliver superior analytical, research and client service tools to meet diverse client needs. Strategic reinvestment in its business, specifically on the technology front, is expected to differentiate CBRE Group from its peers. CBRE has also gained from its cost-cutting efforts and benefited from operational efficiencies, and this trend is expected to continue in the near term. We estimate the company’s core EBITDA to rise 10.5% and 19.6% in 2024 and 2025, respectively, on a year-over-year basis.
Balance Sheet Strength: CBRE had $3.7 billion in total liquidity as of June 30, 2024. The company’s net leverage ratio was 1.58 as of the same date. This is significantly less than CBRE’s primary debt covenant of 4.25X. With ample financial flexibility, CBRE is well-positioned to capitalize on growth opportunities. Its trailing 12-month return on equity is 12.74% compared with the industry’s average of 0.00%. This indicates that the company is more efficient in using shareholders’ funds than its peers.
Image: Bigstock
5 Reasons to Add CBRE Group Stock to Your Portfolio Now
CBRE Group’s (CBRE - Free Report) wide array of real estate products and services offerings, healthy outsourcing business, strategic buyouts, technology investments and solid balance sheet are expected to drive its performance.
Analysts also seem bullish on this stock, with the Zacks Consensus Estimate for CBRE Group’s current-year earnings per share (EPS) being revised 6% upward over the past three months to $4.75.
Shares of this Zacks Rank #2 (Buy) company have rallied 33.3% over the past three months, outperforming its industry’s growth of 15.4%. Given the strength of its fundamentals, there seems to be additional room for growth of this stock.
Image Source: Zacks Investment Research
Factors That Make CBRE Group a Solid Pick
Market-Leading Position & Resilient Business Model: CBRE, the largest commercial real estate services and investment firm (based on 2023 revenues), holds extensive knowledge of domestic and international real estate markets. This helps it enjoy a robust scale. A market-leading position gives it a competitive edge in navigating through any challenging situations and capitalizing on compelling opportunities.
Over the past few years, CBRE has opted for a better-balanced and more resilient business model. In pursuit of this, the company has shifted toward a more diversified and contractual revenue base, which enables it to tide over market disruptions and other economic uncertainties. Our estimate indicates CBRE’s total revenues to increase 10.9% and 12.2% year over year in 2024 and 2025, respectively.
GWS Segment Growth: With occupiers of real estate increasingly opting for outsourcing and relying on the expertise of third-party real estate specialists to optimize their operations, CBRE Group’s Global Workplace Solutions (“GWS”) segment is well-placed to benefit. With significant growth from large first-generation outsourcers, the GWS business pipeline remains elevated, offering CBRE Group scope for growth. For the second quarter of 2024, the GWS segment delivered double-digit net revenue growth. Our estimate indicates a year-over-year rise of 15.3% for the segment’s net revenues in 2024.
Strategic Acquisitions: To widen its global reach and expand and reinforce its service offerings, CBRE Group has been focusing on strategic in-fill acquisitions by acquiring regional or specialty firms as well as independent affiliates. The company opts for larger, transformational deals driven by macro policies. In the second quarter of 2024, CBRE completed five in-fill business acquisitions, including one in the Advisory Services segment and four in the GWS segment, for approximately $290.9 million in cash and non-cash consideration. These opportunistic acquisitions and strategic investments will likely serve as growth drivers, supplementing its organic growth.
Solid Technology Platform: The company’s technology platform helps it develop and deliver superior analytical, research and client service tools to meet diverse client needs. Strategic reinvestment in its business, specifically on the technology front, is expected to differentiate CBRE Group from its peers. CBRE has also gained from its cost-cutting efforts and benefited from operational efficiencies, and this trend is expected to continue in the near term. We estimate the company’s core EBITDA to rise 10.5% and 19.6% in 2024 and 2025, respectively, on a year-over-year basis.
Balance Sheet Strength: CBRE had $3.7 billion in total liquidity as of June 30, 2024. The company’s net leverage ratio was 1.58 as of the same date. This is significantly less than CBRE’s primary debt covenant of 4.25X. With ample financial flexibility, CBRE is well-positioned to capitalize on growth opportunities. Its trailing 12-month return on equity is 12.74% compared with the industry’s average of 0.00%. This indicates that the company is more efficient in using shareholders’ funds than its peers.
Other Stocks to Consider
Some other top-ranked stocks from the real estate operations sector are Colliers International Group Inc. (CIGI - Free Report) and Newmark Group, Inc. (NMRK - Free Report) . Colliers International and Newmark Group each carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for Colliers International’s 2024 earnings per share (EPS) has increased 1.8% over the past two months to $6.12.
The Zacks Consensus Estimate for Newmark Group’s current-year EPS of $1.15 indicates a 9.52% rise year over year.