Back to top

Image: Bigstock

CBRE Group (CBRE) 2019 Earnings Outlook Surpasses Views

Read MoreHide Full Article

Ushering in good news for its shareholders, CBRE Group Inc. (CBRE - Free Report) recently announced an encouraging outlook for full-year 2019. The company expects to achieve adjusted earnings per share of $3.50-$3.70 for the full year, which, at the mid-point of $3.60, which denotes growth of around 10% from the prior year.

The earnings expectations are also ahead of the Zacks Consensus Estimate which is pinned at $3.45. Management expects growth momentum to be supported by substantial operational gains and strategic investments across the company’s business.

Specifically, CBRE expects advisory fee revenues to be up 6-8% from the 2018 level. In the transaction businesses, management guided for solid revenue growth and market share gains. Particularly, leasing is expected to benefit from continuing economic expansion.

Further, Global Workplace Solutions is expected to experience another year of double-digit revenue growth. Fee revenues are projected to be up 10-13% from the prior year. The company’s outsourcing capabilities are increasingly differentiated, and major client wins in 2018 are aiding its outlook for solid revenue growth. Moreover, expanding capabilities are likely to drive new growth with existing clients.

In the real estate investments segment, development services will likely witness another excellent year, with adjusted EBITDA estimated to be closer to the 2017 level.

Notably, CBRE Group has made concerted efforts to diversify its revenue base over the past years. The company has opted for a better-balanced and more resilient business model and in pursuit of this has shifted the business mix towards more contractual. In fact, contractual revenues are projected to be 47% of its total fee revenues in 2019 compared with 19% in 2006. This makes the company resilient to market disruptions and positions it well to achieve both top and bottom-line growth even amid capital market headwinds.

CBRE’s extensive real-estate product and service offerings, improving leasing and outsourcing business, in-fill acquisitions, transformational deals, and healthy balance sheet are expected to be conducive to long-term results. Also, technology investments will give it a comparative edge.
In addition, the company enjoys strong cash flow, and has cash and credit facility capacity in total of $3.5 billion. Also, it has no debt maturities until 2024. However, amid trade tensions, political uncertainty and volatile equity markets, investment volumes are anticipated to be softer given the cautious approach of investors.

Currently, CBRE carries a Zacks Rank #2 (Buy). You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Key Picks

Investors interested in the real estate industry can consider some other top-ranked stocks like Colliers International Group Inc. (CIGI - Free Report) , HFF, Inc. (HF - Free Report) and Jones Lang LaSalle Inc. (JLL - Free Report) . Each of these stocks currently flaunts a Zacks Rank of 1.

Colliers International’s Zacks Consensus Estimate for 2019 earnings moved 9% north to $3.27 in a month’s time.

The Zacks Consensus Estimate for HFF’s 2019 earnings moved up 4.2% to $2.76 over the past month.

The current-year earnings estimates for Jones Lang LaSalle climbed 2.6% in the past month to $11.34.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>

Published in