CBRE Group (CBG) Q2 Earnings: Stock Likely To Disappoint?

CBRE Group, Inc. (NYSE:CBG) is slated to report second-quarter 2016 results on Jul 28, 2016, before the market opens. Last quarter, this commercial real estate services and investment firm had delivered a 9.09% positive earnings surprise.

CBRE beat estimates in all of the trailing four quarters, with a positive average surprise of 6.85%. The Zacks Consensus Estimate for the second quarter is currently pegged at 51 cents.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Strategic in-fill acquisitions play a key role in expanding the geographic coverage and boosting the service offerings of CBRE Group. During 2015, CBRE completed eight in-fill acquisitions. In May 2016, the company acquired a 49% stake in Malaysia’s real estate services provider – C H Williams Talhar & Wong Sdn Bhd, WTW Real Estate Sdn Bhd and WTW Property Services Sdn Bhd (WTW). In June, CBRE Group inked a deal to buy London-based retail property advisor Michael Horwitz & Company. Also, the company opts for larger, transformational deals driven by macro policies. As market conditions continue to improve, we believe these opportunistic acquisitions would serve as growth drivers, supplementing the company’s organic growth.

However, uneasiness in certain global economies may restrict any robust growth tempo of the company. Further, unfavorable foreign currency movements and stiff competition from international, regional and local players remain major concerns.

Earnings Whispers

Our proven model does not conclusively show that CBRE will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP: Since both the Most Accurate estimate and the Zacks Consensus Estimate stand at 51 cents, the Earnings ESP, which represents the difference between the two, is 0.00% for the second quarter.

Zacks Rank: CBRE has a Zacks Rank #4 (Sell).

We caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks in the real estate investment trust sector you may want to consider, as our model shows that they have the right combination of elements to post a positive surprise this quarter:

Sun Communities Inc. (NYSE:SUI) has an Earnings ESP of +2.44% and a Zacks Rank #3. The company will report results on Aug 2.

Regency Centers Corporation (NYSE:REG) has an Earnings ESP of +1.25% and a Zacks Rank #3. The company will release results on Aug 2.

National Health Investors Inc. (NYSE:NHI) has an Earnings ESP of +0.83% and a Zacks Rank #3. The company will report results on Aug 5.