CBRE Hits a New 52-Week High Riding on Acquisition News

Zacks Equity Research

Shares of CBRE Group Inc. (CBG) reached a new 52-week high of $33.24 during the trading session on Thursday, Jul 17, 2014. The solid momentum in its price followed the recent acquisition of U.S. Equities Realty’s U.S.-based operations as well as the last-week announcement to takeover Preuss Gesellschaft mbH and its subsidiaries in Germany.

The closing price of $32.74 reflected a robust year-to-date return of over 24% for the stock. The average trading volume for the session was more than 1.85 million shares.

Despite hitting its 52-week high, this Zacks Rank #1 (Strong Buy) stock has plenty of upside left, given its prudent acquisition decisions, improving operating environment, diverse revenue base and a long-term expected growth rate of 13.5%.

Growth Drivers

Strategic buyouts have played a vital role in enhancing CBRE’s geographic coverage as well as broadening its service offerings. Very recently, the company announced its acquisition of U.S. Equities Realty’s U.S.-based operations and consequent merging of their respective Chicago businesses.

U.S. Equities offers a broad spectrum of commercial real estate services to its clients and its development/program management, owner’s representation and consulting services are particularly expected to boost CBRE’s offerings. Moreover, experts from U.S. Equities will come on board for CBRE. (Read: CBRE on Expansion Spree, Buys U.S. Equities Ops).

Last week, CBRE also disclosed a deal to acquire Preuss Gesellschaft mbH and its subsidiaries. This represents CBRE’s second acquisition in Germany this year, after the purchase of the real estate technical consulting firm – VALTEQ Gesellschaft mbH – in February. (Read: CBRE to Expand Germany Biz with Preuss Acquisition). The buyout is a strategic move for CBRE, given the prospects of solidifying the company’s growing consultancy offering in this major market.

Moreover, aided by higher revenues, CBRE reported first-quarter 2014 adjusted earnings of 25 cents per share in April, well ahead of the Zacks Consensus Estimate of 17 cents and up 56% year over year. The company witnessed sound contributions from the acquisition of U.K.-based Norland Managed Services Ltd., a commercial building technical engineering services provider.

As market conditions continue to improve, we believe that such opportunistic buyouts would help the company to ride on the growth trajectory, supplementing its organic growth.    

Other Stocks to Consider

Apart from CBRE, other stocks that scaled a new 52 week high on Jul 17 include Avalonbay Communities Inc. (AVB), Education Realty Trust, Inc. (EDR) and Equity Residential (EQR).

Read the Full Research Report on CBG
Read the Full Research Report on AVB
Read the Full Research Report on EQR
Read the Full Research Report on EDR


Zacks Investment Research