A month has gone by since the last earnings report for CBRE Group (CBRE - Free Report) . Shares have added about 1.3% in that time frame, underperforming 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 catalysts.
CBRE Group Q4 Earnings, Revenues Beat Estimates
CBRE Group reported fourth-quarter 2018 adjusted earnings per share of $1.21, comfortably beating the Zacks Consensus Estimate of $1.13. The figure also compares favorably with the prior-year tally of 96 cents. Results indicate strong revenue growth, driven by leasing and occupier outsourcing.
On a GAAP basis, fourth-quarter earnings per share came in at $1.15, indicating a substantial year-over-year jump from 47 cents.
The company posted revenues of around $6.3 billion, which beat the Zacks Consensus Estimate of $5.9 billion. It also compares favorably with the year-ago tally of $5.5 billion. Moreover, fee revenues were up 16% (18% in local currency) year over year to $3.4 billion, while organic fee revenues climbed 13% (15% local currency).
CBRE Group reported year-over-year leasing revenue growth of 22% (24% local currency), backed by double-digit increases across all three regions. Global occupier outsourcing revenues increased 14% (17% local currency), while fee revenues jumped 17% (20% local currency). This was driven by double-digit growth in occupier outsourcing revenues and fee revenues by all three regions.
In addition, combined capital markets businesses, which include property sales and commercial mortgage origination, reported revenue growth of 9% (11% local currency). Furthermore, global property sales revenues climbed 7% (10% local currency), with all three regions reporting market share gains.
Quarter in Detail
CBRE Group’s largest business segment — The Americas — reported 14% rise (15% in local currency) in revenues from the prior-year quarter to around $3.9 billion, registering growth in the United States. The APAC segment witnessed revenue improvement of 9% (14% local currency) from the prior-year quarter to nearly $643.9 million, with healthy growth in Greater China, India and Japan.
Revenues from the EMEA segment rose 18% (23% in local currency) to $1.6 billion, supported by encouraging performance in Belgium, France, Germany and the U.K.
In the Global Investment Management segment, revenues totaled approximately $118.7 million, up 15% year over year (18% in local currency), while the Development Services segment posted revenues of nearly $32.8 million, up 2% year over year (same in local currency).
CBRE Group exited fourth-quarter 2018 with cash and cash equivalents of around $777.2 million, up from $751.8 million as of Dec 31, 2017.
Amid volatility in the equity markets, the company bought back more than $200 million of its stock, acquiring 5.1 million shares at an average price of $40.20 per share, during the fourth quarter and through early January 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, CBRE has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise CBRE has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.