CBRE Group (CBRE) Q1 Earnings Beat On Global Regions Growth

CBRE Group Inc. (NYSE:CBRE) reported first-quarter 2018 adjusted earnings per share of 54 cents, beating the Zacks Consensus Estimate of 49 cents. The figure also marked a 20% increase from the prior-year quarter tally of 45 cents.

Results indicate strong revenue growth across all three of its global regions. Specifically, the company experienced impressive growth in global occupier outsourcing, capital markets and Asia Pacific (APAC) business.

On a GAAP basis, earnings per share came in at 44 cents compared with the prior-year quarter tally of 40 cents.

The company posted revenues of around $4.67 billion, which beat the Zacks Consensus Estimate of $3.34 billion. It also compared favorably with the year-ago tally of $4.05 billion. Moreover, fee revenues were up 18% (13% in local currency) year over year to $2.3 billion.

Global occupier outsourcing revenues increased 16% (12% local currency) from the prior-year quarter, with solid growth in India, the United States, and a number of continental European countries. In addition, capital markets businesses, which include property sales and commercial mortgage origination, reported combined revenue increase of 17% (14% local currency).

Quarter in Detail

CBRE Group’s largest business segment — The Americas — reported 8% rise (same in local currency) in revenues from the prior-year quarter to around $2.9 billion, registering growth in Canada, Mexico and the United States. APAC witnessed revenue growth of 23% (17% local currency) from the prior-year quarter to $495.5 million, with healthy growth in India and Japan.

Revenues from the Europe, the Middle East & Africa (EMEA) segment rose 31% (16% in local currency) to nearly $1.2 billion, supported by encouraging performance in France, Italy, the Netherlands and the U.K.

In the Global Investment Management segment, revenues totaled $123.7 million, up 38% year over year (30% in local currency), while the Development Services segment posted revenues of $23.3 million, up 64% year over year.

Liquidity

CBRE Group exited first-quarter 2018 with cash and cash equivalents of $642.9 million, down from $751.8 million as of Dec 31, 2017.

Outlook

Management stated that the company is “tracking slightly ahead” of its full-year 2018 guidance. Previously, CBRE Group had projected 2018 adjusted earnings per share in the band of $3.00-$ 3.15, marking a projected increase of 13% at the mid-point. The Zacks Consensus Estimate for the same is currently pegged at $3.06.

Our Viewpoint

We are encouraged with the better-than-expected performance of CBRE Group in the first 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 be conducive to near-term results. Nevertheless, competition from international, regional and local players remains a concern for CBRE Group.

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

Investors interested in the real estate industry can also consider other similarly-ranked stocks like Invitation Homes Inc. (NYSE:INVH) , Realogy Holdings Corp. (NYSE:RLGY) and RE/MAX Holdings, Inc. (NYSE:RMAX) .

The Zacks Consensus Estimate for full-year 2018 earnings of Invitation Homes remained unchanged at $1.18 over the past month.

The same for Realogy Holdings remained flat in a week’s time at $1.88.

The full-year 2018 earnings estimate for RE/MAX Holdings remained unchanged at $2.13 in the past week.

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