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CBRE Group (CBRE) Beats Q2 Earnings Estimates, Raises View

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CBRE Group Inc. (CBRE - Free Report) reported second-quarter 2018 adjusted earnings per share of 74 cents, beating the Zacks Consensus Estimate of 72 cents. The figure also marked a 10.4% increase from the prior-year tally of 67 cents.

Results indicate strong revenue growth driven by leasing, occupier outsourcing and development services.

On a GAAP basis, earnings per share came in at 67 cents compared with the prior-year quarter tally of 59 cents.

The company posted revenues of around $5.1 billion, which beat the Zacks Consensus Estimate of $4.7 billion. It also compared favorably with the year-ago tally of $4.4 billion. Moreover, fee revenues were up 15% (12% in local currency) year over year to $2.5 billion, while organic fee revenue growth was 13% (10% local currency).

CBRE Group reported year-over-year leasing revenue growth of 20% (18% local currency). Global occupier outsourcing revenues increased 18% (15% local currency) from the prior-year quarter, with solid growth around the world and specifically in Europe, the Middle East & Africa (EMEA) and Asia Pacific (APAC).

In addition, capital markets businesses, which include property sales and commercial mortgage origination, reported combined revenue growth of 3% (2% local currency). However, global property sales revenues inched up 1% (down 2% local currency).

Quarter in Detail

CBRE Group’s largest business segment — The Americas — reported 11% rise (same in local currency) in revenues from the prior-year quarter to around $3.1 billion, registering growth in Brazil, Canada and the United States. The APAC segment witnessed revenue growth of 11% (8% local currency) from the prior-year quarter to $538.2 million, with healthy growth in Greater China and India.

Revenues from the EMEA segment rose 29% (20% in local currency) to $1.3 billion, supported by encouraging performance in France, Italy, the Netherlands and the U.K.

In the Global Investment Management segment, revenues totaled $98.9 million, up 7% year over year (2% in local currency), while the Development Services segment posted revenues of $18.4 million, up 8% year over year.

Liquidity

CBRE Group exited second-quarter 2018 with cash and cash equivalents of $531.5 million, down from $751.8 million as of Dec 31, 2017.

Outlook

CBRE Group raised its outlook for full-year 2018. The company expects adjusted earnings per share of $3.10 to $3.20, up from $3.00 to $3.15, denoting 15% growth for the full year at the mid-point of the outlook. The Zacks Consensus Estimate for the same is currently pegged at $3.12.

Our Viewpoint

We are encouraged with the better-than-expected performance of CBRE Group in the June-end quarter. The company’s extensive real-estate products and service offerings, improving leasing and outsourcing business, strategic in-fill acquisitions, transformational deals and healthy balance sheet are expected to be conducive to near-term results.

Nevertheless, with planned investments, as well as shift toward a comparatively lower margin business, the company’s margin is likely to be affected in the near future. Also, competition from international, regional and local players remains a concern for CBRE Group.

CBRE Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CBRE Group, Inc. Price, Consensus and EPS Surprise
 

Investors interested in the real estate industry can also consider some better-ranked stocks like RE/MAX Holdings, Inc. (RMAX - Free Report) , Henderson Land Development Company Limited (HLDCY - Free Report) and Newmark Group, Inc. (NMRK - Free Report) . While RE/MAX Holdings sports a Zacks Rank of 1, Henderson Land Development Company and Newmark Group carry a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for full-year 2018 earnings of RE/MAX Holdings has been revised 5.5% upward to $2.29 over the past two months.

The same for Henderson Land Development Company remained flat, in a week’s time, at 44 cents.

The current-year earnings estimate for Newmark Group has been revised 3.4% north to $1.53 in the past two months.   

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