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CBRE (CBG) Beats Q4 Estimates on Solid Global Regions Growth

Zacks

CBRE Group Inc. CBG reported fourth-quarter 2017 adjusted earnings per share of 99 cents, beating the Zacks Consensus Estimate of 93 cents. The figure also marked a 6% increase from the prior-year quarter tally of 93 cents.

Results indicate strong revenue growth in all three of its global regions. Specifically, the company experienced solid growth in occupier outsourcing and leasing fee revenue.

On a GAAP basis, earnings per share came in at 49 cents compared with the prior-year quarter tally of 78 cents, reflecting the impact of the Tax Act.

The company posted revenues of around $4.3 billion, which beat the Zacks Consensus Estimate of $4.1 billion. It also compared favorably with the year-ago tally of $3.8 billion. Moreover, fee revenues were up 11% (9% in local currency) year over year to $3.0 billion.

For full-year 2017, adjusted earnings per share came in at $2.71, 18% ahead of the prior-year tally of $2.30. This was backed by 9% year-over-year growth in total revenues to $14.2 billion.

Quarter in Detail

CBRE Group’s largest business segment — The Americas — reported 11% rise (12% in local currency) in revenues from the prior-year quarter to around $2.3 billion, with robust growth in Canada, Mexico and the United States. Asia Pacific (APAC) witnessed 13% growth in revenues to $526.6 million (11% in local currency), with solid growth across the region and more pronounced in Australia, India, Japan and Singapore.

Revenues from the Europe, the Middle East & Africa (EMEA) segment rose 17% (9% in local currency) to $1.3 billion, backed by Spain and the U.K.’s performance.

In the Global Investment Management segment, revenues totaled $103.2 million, up 12% year over year (7% in local currency), while the Development Services segment reported revenues of nearly $32.3 million, up 60% year over year.

Liquidity

CBRE Group exited year-end 2017 with cash and cash equivalents of $751.8 million, down from $762.6 million as of Dec 31, 2016.

Outlook

CBRE Group expects 2018 adjusted earnings per share in the band of $3.00-$ 3.15, denoting a projected increase of 13% at the mid-point of the range. The Zacks Consensus Estimate for the same is currently pegged at $2.84.

Our Viewpoint

We are encouraged with the better-than-expected result of CBRE Group in the fourth quarter.

The company’s extensive real estate products and services offerings, improving leasing and outsourcing business, strategic in-fill acquisitions, transformational deals, and healthy balance sheet are expected to drive results in the near future. Nevertheless, competition from international, regional and local players, exposure to unfavorable foreign currency movements and uneasiness in certain global economies remain concerns 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

CBRE Group, Inc. Price, Consensus and EPS Surprise | CBRE Group, Inc. Quote


Investors interested in the real estate industry can also consider some better-ranked stocks like HFF, Inc. HF, Jones Lang LaSalle Inc. JLL and Invitation Homes Inc. INVH. All these stocks carry a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for full-year 2017 earnings of HFF Inc. inched up 0.4% to $2.37 in the last month.

The same for Invitation Homes climbed 3% to $1.04 in two months’ time.

The full-year 2018 earnings estimate for Jones Lang LaSalle moved up 3.3% to $9.43 over the past month.

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