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Why Is CBRE (CBRE) Up 3.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for CBRE Group (CBRE - Free Report) . Shares have added about 3.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CBRE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

CBRE Group Q3 Earnings & Revenues Beat Estimates

CBRE Group reported third-quarter 2018 adjusted earnings per share of 79 cents, beating the Zacks Consensus Estimate of 74 cents. The figure also compares favorably with the prior-year tally of 65 cents.

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

On a GAAP basis, earnings per share came in at 85 cents, indicating a year-over-year jump of 47%.

The company posted revenues of around $5.3 billion, which beat the Zacks Consensus Estimate of $5.16 billion. It also compares favorably with the year-ago tally of $4.6 billion. Moreover, fee revenues were up 13% (14% in local currency) year over year to $2.6 billion, while organic fee revenues climbed 9% (10% local currency).

CBRE Group reported year-over-year leasing revenue growth of 17% (18% local currency). Global occupier outsourcing revenues increased 15% (16% local currency) from the prior-year quarter, with solid growth around the world and specifically in Americas, 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 7% (8% local currency). Furthermore, global property sales revenues climbed 4% (5% local currency).

Quarter in Detail

CBRE Group’s largest business segment — The Americas — reported 12% rise (same in local currency) in revenues from the prior-year quarter to around $3.3 billion, registering growth in the United States. The APAC segment witnessed revenue improvement of 6% (9% local currency) from the prior-year quarter to nearly $530 million, with healthy growth in Greater China, Singapore and India.

Revenues from the EMEA segment rose 22% (23% in local currency) to $1.3 billion, supported by encouraging performance in Germany, Italy, Spain and the U.K.

In the Global Investment Management segment, revenues totaled approximately $93.1 million, up 1% year over year (same in local currency), while the Development Services segment posted revenues of nearly $25.8 million, up 60% year over year (same in local currency).

Liquidity

CBRE Group exited third-quarter 2018 with cash and cash equivalents of around $550.5 million, down from $751.8 million as of Dec 31, 2017.

Outlook

CBRE Group expects adjusted earnings per share for 2018 to come at the higher end of the earlier provided range of $3.10-$3.20.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

Currently, CBRE has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

CBRE has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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