CBRE Group, Inc. banks on strategic in-fill acquisitions to widen its geographic reach, expand and reinforce service offerings.
Most recently, this Los Angeles, CA-based commercial real estate services and investment firm announced the completion of the acquisition of majority stake in Toronto-based infrastructure and private equity solutions provider — Caledon Capital Management Inc. — for an undisclosed amount. The move complements the CBRE Global Investors’ service offerings, enhancing the set of infrastructure investment programs.
Also, the company announced a long-term global agreement with Kahua. The move will likely help CBRE improve efficiency across its global project management offering through Kahua’s cloud-based collaborative platform.
In addition, this Zacks Rank #1 (Strong Buy) stock has risen 17.5% year to date compared with 11.5% growth recorded by its industry. The stock is likely to move higher in the near term, as there are a number of favorable factors.
Why a Solid Choice?
Revenue Strength: CBRE’s top line has been displaying 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, acquisitions have played a vital role in expanding its business. In fact, the company has completed over 110 acquisitions since 2003, including five large, strategic acquisitions. As market conditions continue to improve, we believe these diligent acquisitions and strategic investments will likely serve as growth drivers, supplementing the CBRE’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 3.9% 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 4.7%. Its projected EPS growth rate for 2017 is around 11.2%.
Superior ROE: CBRE’s Return on Equity (ROE) is 26.4% compared with the industry’s average of 3.4%. 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, the Zacks Consensus Estimate for 2017 moved up 1.6% to $2.56 in a week’s time. Also, the same estimate for 2018 inched up 0.8% to $2.66, during the same time frame. This reflects analysts’ bullish sentiments on the stock.
Other Key Picks
Investors interested in the real estate industry may consider stocks like FirstService Corporation (FSV - Free Report) , The St. Joe Company (JOE - Free Report) and Gazit Globe Ltd (GZT - Free Report) . While FirstService Corporation and St. Joe sport a Zacks #1 Rank, LSL Property Services carries 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 1.5% to $1.97, over the past 60 days.
In a month’s time, St. Joe’s Zacks Consensus Estimate for 2017 earnings climbed to 25 cents from 3 cents.
In addition, the Zacks Consensus Estimate for Gazit Globe’s full-year 2017 earnings jumped 16.3% to 93 cents, during the same time frame.
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