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Can CBRE Group (CBRE) Keep Its Winning Streak Alive in Q2?
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CBRE Group, Inc. (CBRE - Free Report) , the global leader in real estate services, is gearing up to announce its second-quarter 2024 earnings on Jul 25 before the bell. The company has been at the forefront of the industry, offering a wide range of services, including property sales and leasing, property management, valuation, project management and consulting.
In the last reported quarter, this Dallas, TX-based commercial real estate services and investment firm reported an earnings surprise of 13.04%. Results reflected growth in its resilient lines of business. Global Workplace Solutions (“GWS”) experienced strong business wins, though higher costs and one-time expenses affected margins. The leasing business performed well due to office leasing growth on a worldwide basis amid a resilient economy and progress on return-to-office plans. However, property sales transaction activity remained affected amid the persistent inflation that kept interest rates higher than expected.
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 11.09%. The graph below depicts this surprise history:
In the second quarter, CBRE Group is likely to have benefited from its ongoing emphasis on creating a more balanced and resilient business model, transitioning to a more contractual business mix. The company's diversification across property types, business lines, geographic markets and clients, along with disciplined expense management, is expected to have contributed positively during this period.
The increasing demand for outsourcing services offers significant opportunities for major industry players like CBRE to expand their client base and offerings. In the second quarter, CBRE Group is likely to have capitalized on these favorable trends, experiencing growth in the GWS segment. Widespread demand across clients, sectors and geographies is expected to drive its performance.
Furthermore, CBRE is prioritizing technology investments to enhance efficiency, provide unique client services and increase market share. Embracing technology has likely helped the company address current challenges. Additionally, ongoing cost reduction initiatives are expected to contribute to margin improvement.
However, persistent macroeconomic uncertainties continue to adversely impact commercial real estate transactions. A high interest rate environment has affected credit-market conditions and led investors to adopt a cautious approach, delaying the closing timeline for transactions. Though a significant turnaround is likely to remain elusive, we expect a modest improvement in the Advisory Services segment in the second quarter.
Projections
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $8.52 billion. This suggests an increase of 10.4% year over year. The consensus estimate for second-quarter 2024 net revenues from Advisory Services stands at $2.1 billion, which indicates a rise from the year-ago quarter’s $2.02 billion.
The consensus estimate for the GWS segment’s net revenues is pegged at $2.48 billion, which implies an increase from the year-ago quarter’s $2.2 billion.
The consensus estimate for the second-quarter adjusted EBITDA for Advisory services is pegged at $309.05 million, down from $315.44 million reported in the year-ago quarter. For GWS, the same is pegged at $251.91 million for the quarter, up from $232.68 million reported a year ago.
Before the quarterly earnings release, analysts do not seem optimistic about the company’s prospects as the Zacks Consensus Estimate for the April-June quarter’s earnings per share (EPS) has moved south six cents to 69 cents over the past month. It suggests a 15.9% decline year over year.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts an 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, which is the case here.
CBRE Group currently carries a Zacks Rank of 3 and has an Earnings ESP of +7.58%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks That Warrant a Look
Here are two other stocks from the real estate operations industry — Jones Lang LaSalle Incorporated (JLL - Free Report) and Cushman & Wakefield plc (CWK - Free Report) — you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.
Image: Bigstock
Can CBRE Group (CBRE) Keep Its Winning Streak Alive in Q2?
CBRE Group, Inc. (CBRE - Free Report) , the global leader in real estate services, is gearing up to announce its second-quarter 2024 earnings on Jul 25 before the bell. The company has been at the forefront of the industry, offering a wide range of services, including property sales and leasing, property management, valuation, project management and consulting.
In the last reported quarter, this Dallas, TX-based commercial real estate services and investment firm reported an earnings surprise of 13.04%. Results reflected growth in its resilient lines of business. Global Workplace Solutions (“GWS”) experienced strong business wins, though higher costs and one-time expenses affected margins. The leasing business performed well due to office leasing growth on a worldwide basis amid a resilient economy and progress on return-to-office plans. However, property sales transaction activity remained affected amid the persistent inflation that kept interest rates higher than expected.
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 11.09%. The graph below depicts this surprise history:
CBRE Group, Inc. Price and EPS Surprise
CBRE Group, Inc. price-eps-surprise | CBRE Group, Inc. Quote
Factors at Play
In the second quarter, CBRE Group is likely to have benefited from its ongoing emphasis on creating a more balanced and resilient business model, transitioning to a more contractual business mix. The company's diversification across property types, business lines, geographic markets and clients, along with disciplined expense management, is expected to have contributed positively during this period.
The increasing demand for outsourcing services offers significant opportunities for major industry players like CBRE to expand their client base and offerings. In the second quarter, CBRE Group is likely to have capitalized on these favorable trends, experiencing growth in the GWS segment. Widespread demand across clients, sectors and geographies is expected to drive its performance.
Furthermore, CBRE is prioritizing technology investments to enhance efficiency, provide unique client services and increase market share. Embracing technology has likely helped the company address current challenges. Additionally, ongoing cost reduction initiatives are expected to contribute to margin improvement.
However, persistent macroeconomic uncertainties continue to adversely impact commercial real estate transactions. A high interest rate environment has affected credit-market conditions and led investors to adopt a cautious approach, delaying the closing timeline for transactions. Though a significant turnaround is likely to remain elusive, we expect a modest improvement in the Advisory Services segment in the second quarter.
Projections
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $8.52 billion. This suggests an increase of 10.4% year over year. The consensus estimate for second-quarter 2024 net revenues from Advisory Services stands at $2.1 billion, which indicates a rise from the year-ago quarter’s $2.02 billion.
The consensus estimate for the GWS segment’s net revenues is pegged at $2.48 billion, which implies an increase from the year-ago quarter’s $2.2 billion.
The consensus estimate for the second-quarter adjusted EBITDA for Advisory services is pegged at $309.05 million, down from $315.44 million reported in the year-ago quarter. For GWS, the same is pegged at $251.91 million for the quarter, up from $232.68 million reported a year ago.
Before the quarterly earnings release, analysts do not seem optimistic about the company’s prospects as the Zacks Consensus Estimate for the April-June quarter’s earnings per share (EPS) has moved south six cents to 69 cents over the past month. It suggests a 15.9% decline year over year.
Here Is What Our Quantitative Model Predicts:
Our proven model predicts an 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, which is the case here.
CBRE Group currently carries a Zacks Rank of 3 and has an Earnings ESP of +7.58%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks That Warrant a Look
Here are two other stocks from the real estate operations industry — Jones Lang LaSalle Incorporated (JLL - Free Report) and Cushman & Wakefield plc (CWK - Free Report) — you may want to consider as our model shows that these also have the right combination of elements to report a surprise this quarter.
Jones Lang LaSalle is slated to report quarterly numbers on Aug 6. JLL has an Earnings ESP of +0.77% and carries a Zacks Rank of 3 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cushman & Wakefield is scheduled to report quarterly numbers on Jul 29. CWK has an Earnings ESP of +18.13% and a Zacks Rank of 3 presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.