What's In The Offing For CBRE Group's (CBRE) Q4 Earnings?

CBRE Group, Inc. (NYSE:CBRE) is slated to report fourth-quarter and full-year 2019 results on Feb 27, before the opening bell. Results are anticipated to display year-over-year growth in both revenues and earnings.

In the last reported quarter, this Los Angeles, CA-based commercial real estate services and investment firm delivered a 1.28% positive earnings surprise. Results indicated strong revenue growth during the quarter.

CBRE has a decent earnings surprise history, with the company surpassing estimates in each of the trailing four quarters, the average beat being 11.53%. The graph below depicts this surprise history:

Let’s see how things have shaped up prior to this announcement.

Factors at Play

CBRE Group is likely to have continued its focus for a better-balanced and more resilient business model in the fourth quarter, shifting the company’s business mix toward a more contractual one.

Moreover, the company’s Global Workplace Solutions segment, which provides a broad suite of integrated, contractually-based services to occupiers of real estate, including facilities management, project management, transaction management and management consulting, is likely to have witnessed growth in the quarter under review. This is because occupiers of real estate are increasingly opting for outsourcing and depending on the expertise of third-party real estate specialists for improvement in execution and efficiency.

In addition, over the years, the firm has grown organically and banked on strategic in-fill acquisitions to boost its service offerings and geographic reach. Strategic reinvestment in the company’s business, specifically on the technology front, has also differentiated CBRE Group from its peers. With an expanded capability to service, its number of large clients is likely to have been high in the December-end quarter.

The Zacks Consensus Estimate for fee revenues from Advisory Services is currently pinned at $2,524 million, up nearly 27% sequentially. The estimate for Global Workplace Solutions’ fee revenues is $879 million, suggesting an increase of 10.8% from the prior quarter. Further, fee revenues from Real Estate Investments are estimated at $301 million in the to-be-reported quarter, indicating a significant increase sequentially from the third quarter’s $129 million.

Consequently, aided by estimated 10.7% year-over-year revenue growth to $6.97 billion, CBRE Group’s earnings per share will likely be up 10.7% to $1.34, during the same time frame.

However, although there is ample availability of relatively low-cost financing, investment volumes are expected to have remained soft following a record 2018 as investors have adopted a cautious stance. In addition, trade-war tensions, political uncertainties and volatile equity markets might have added to the woes, affecting transaction levels.

CBRE Group’s activities during the October-December period were inadequate to win analysts’ confidence. Consequently, the Zacks Consensus Estimate for quarterly earnings remained unchanged at $1.34.

The company projects adjusted earnings per share for full-year 2019 in the $3.70-$3.80 band. The Zacks Consensus Estimate for the same is currently pinned at $3.74, indicating 14.02% year-over-year growth year on revenues of $23.74 billion.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict a positive earnings surprise for CBRE Group this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although CBRE Group carries a Zacks Rank of 3, its Earnings ESP of 0.00% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

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Jones Lang LaSalle Incorporated’s (NYSE:JLL) Zacks Consensus Estimate for the current-year earnings per share climbed 2% to $13.93 over the past month. Shares of this Zacks #2 Ranked company have gained 12.6% over the past six months.

LGI Homes, Inc. (NASDAQ:LGIH) also carries a Zacks Rank of 2, currently. The company’s ongoing-year earnings per share estimate moved 2.6% north to $7.86 in two months’ time. The stock has rallied 34.9% in the past year.

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