CBRE Group, Inc. recently delivered a solid performance in second-quarter 2017. The company delivered a positive earnings surprise of 22.6%. Results reflect strength in regional services business and solid organic growth in global occupier outsourcing business, and benefit from cost control efforts.
Moreover, this commercial real estate services and investment firm raised its outlook for full-year 2017 adjusted earnings per share to $2.53–$2.63, which at the mid-point indicates a 12% increase for full-year 2017.
In addition, this Zacks Rank #1 (Strong Buy) stock has risen 16.9% year to date compared with 10.7% growth recorded by its industry.
Why a Solid Choice?
Revenue Strength: CBRE’s top line has been exhibiting strength for the past several years. In fact, from 2003 to the trailing 12-month Q1 2017, the company’s revenue witnessed a CAGR of 16%. Further, in second-quarter 2017, the company’s revenues totaled $3.3 billion, reflecting an increase of 4% year over year. Additionally, CBRE’s projected sales growth is 6.1% for 2017.
Also, strategic in-fill acquisitions have played a vital role in widening its geographic coverage, as well as expanding and reinforcing service offerings. Furthermore, CBRE opts for larger, transformational deals driven by macro policies. In fact, the company has completed over 110 acquisitions since 2003, including five large, strategic acquisitions.
Moreover, since the beginning of 2017 through Jul 27, the company closed four traditional in-fill acquisitions. In addition, CBRE group enhanced its technology platform by acquiring two software-as-a-service companies and making an equity investment in a third. As market conditions continue to improve, we believe that these opportunistic acquisitions and strategic investments will likely serve as growth drivers, supplementing the company’s organic growth.
Cash Flow Growth: CBRE enjoyed historical cash flow growth (3–5 years) of 20.6%, which comfortably exceeded 9.7% growth registered by the industry. Also, its current cash flow growth of 13.9% compares favorably with the 4.4% decline estimated for the industry.
EPS Growth: CBRE has witnessed 18.1% growth in EPS in the last three to five years against the industry’s 9.2%. Its projected EPS growth rate for 2017 is around 11.5%, which is better than 5.2% growth projected for the industry.
Superior ROE: CBRE’s Return on Equity (ROE) ratio is 21.7% compared with the industry’s average of 4.2%. This highlights that the company reinvests more efficiently compared to the industry.
Estimate Revisions: CBRE has also been witnessing solid positive estimate revisions, of late. In fact, over the past 30 days, the Zacks Consensus Estimate for 2017 moved up 6.7% to $2.56. Also, the same estimate for 2018 climbed 3.9% to $2.64, over the same time frame. This reflects analysts’ bullish sentiments on the stock.
Investors interested in the real estate industry may consider stocks like FirstService Corporation (FSV - Free Report) , Henderson Land Development Company Limited (HLDCY - Free Report) and LSL Property Services Plc . While FirstService Corporation sports a Zacks #1 Rank, Henderson Land Development Company and LSL Property Services carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FirstService Corporation’s 2017 earnings moved up 9.3% to $1.41, over the past 30 days.
For Henderson Land Development Company, the Zacks Consensus Estimate for 2017 remained unchanged at 44 cents, over the past seven days.
In addition, the Zacks Consensus Estimate for LSL Property Services 2017 earnings climbed 13.8% to 33 cents, over the past 30 days.
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