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Can CBRE Group (CBRE) Tide Over Low Property Sales & Leasing?

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CBRE Group (CBRE - Free Report) has a broad range of real estate products and services, and an extensive knowledge of domestic and international real estate markets. Moreover, the company has grown organically and banked on strategic in-fill acquisitions to boost its service offerings and geographic reach. With an expanded capability to service, the company’s reserve of large clients has expanded significantly over the past years.

The company’s better-than-expected first-quarter 2020 results reflect solid performance in the Advisory Services segment. However, in the Real Estate Investments segment, a $27-million decline in its co-investments in the public real estate securities portfolio played spoilsport. Nevertheless, the company withdrew its full-year guidance issued on Feb 27, in light of the coronavirus pandemic and resultant uncertain operating environment.

The coronavirus pandemic has led to significant amounts of uncertainty, interruption of business activity and substantial impact on global markets as well as adverse impact on consumer and business sentiments.

In the second quarter, business contraction is likely. Management noted that U.S. leasing and property sales were down more than 40% compared with the prior year since April.

In its advisory business, there is likely to be substantial decline in revenues from leasing and property sales. In addition, as a result of the pandemic, loan origination volume is likely to decline, weighing on loan servicing revenue. Also, the company needs to support modest liquidity requirements necessitated by the GSE's rent forbearance.

Furthermore, though the company’s Global Workplace Solutions (GWS) business is likely to be comparatively resilient, growth will likely remain restrained, given the economic uncertainty and operational challenges onboarding clients under shelter in place orders.

Nevertheless, the company’s market leading position is likely to give it a competitive edge in navigating through the current challenges. The company enjoys a robust scale and healthy outsourcing business and is among a few companies along with Jones Lang LaSalle Incorporated (JLL - Free Report) offering a vast suite of services to clients. Additionally, the company has grown organically and banked on strategic in-fill acquisitions to boost its service offerings and geographic reach.

Further, CBRE Group has opted for a better-balanced and more resilient business model, and in pursuit of this the company has shifted toward more diversified and contractual revenue base over the past years. Also, strategic reinvestment in its business, specifically on the technology front, is anticipated to differentiate CBRE Group from its peers.

The company is also focused on maintaining solid balance-sheet strength and ample liquidity, and exited first-quarter 2020 with $3.4 billion of liquidity and no debt maturities until 2023. With a significant balance-sheet flexibility and industry-leading market position, it is well poised to navigate through the challenging times and bank on solid opportunities.

Shares of this Zacks Rank # 4 (Sell) company have declined 6.5% over the past year compared with the industry’s loss of 11.8%.



The recent trend in earnings estimates revisions for the ongoing year does not indicate a favorable outlook for CBRE Group. The Zacks Consensus Estimate for the 2020 earnings per share moved down 9.6% in a month’s time.

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Exp World Holdings, Inc.’s (EXPI - Free Report) Zacks Consensus Estimate for 2020 EPS has been revised upward to 11 cents from 1 cent over the past month. The stock currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Consolidated-Tomoka Land Co.’s (CTO - Free Report) current-quarter consensus EPS estimate moved to 84 cents from 26 cents in a month’s time. It sports a Zacks Rank of 1, currently.

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