CBRE Group (CBRE) to Post Q2 Earnings: What's in the Cards?
CBRE Group, Inc. CBRE is slated to report second-quarter 2023 earnings on Jul 27 before the opening bell. Its quarterly results might exhibit a year-over-year decline in revenues and earnings per share (EPS).
In the last reported quarter, this Dallas, TX-based commercial real estate services and investment firm reported an earnings surprise of 13.58%. The quarterly results reflected the benefits of diversification and the expansion of its resilient business in recent years despite the challenging macro environment.
Over the preceding four quarters, the company’s earnings surpassed the Zacks Consensus Estimate on three occasions and missed once, the average beat being 12.27%. 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
CBRE Group provides a wide range of real estate products and services offerings and enjoys a robust scale. Its continued focus on a better-balanced and more resilient business model is likely to have benefited its second-quarter earnings. Also, its contractual and more diversified revenue base and cost-cutting measures are expected to have played to its strength.
The company’s Global Workplace Solutions (GWS) segment is likely to have capitalized on the increasing outsourcing needs of real estate occupiers to optimize their operations.
The Zacks Consensus Estimate for GWS segment’s net revenues is pegged at $2,164.22 million, suggesting an increase of 10.6% from the year-ago quarter’s $1,955.57 million. Our estimate for quarterly net revenues for this segment indicates an increase of 8.8% year over year.
Further, CBRE Group is expected to have continued with reinvestments on the technology front during the to-be-reported quarter to develop and deliver superior analytical, research and client service tools to meet diverse client needs. Also, its solid balance sheet position is likely to have supported its strategic in-fill acquisitions focused on boosting its global reach and expanding and reinforcing its service offerings.
However, persistent macroeconomic uncertainty and its adverse impact on commercial real estate transactions might have cast a pall on the company’s transaction-based businesses’ performance during the second quarter.
With challenging capital market conditions amid high interest rates, many capital sources have tightened their underwriting standards, reducing credit availability. Under these circumstances, investors are likely to have paused or reconsidered their buying decisions and delayed the closing timeline for transactions. This is expected to have hurt deal volume and size.
Also, unfavorable foreign currency movement and a choppy geopolitical environment might have been a spoilsport for CBRE during the quarter.
The consensus estimate for quarterly revenues is currently pegged at $7.57 billion, indicating a decline of 2.64% year over year.
The Zacks Consensus Estimate for second-quarter 2023 net revenues from Advisory Services stands at $1,902.01 million, indicating a 26% decline from the year-ago quarter’s $2,571.44 million. We estimate net revenues for this segment to fall 22.5% year over year for the quarter.
The consensus mark for net revenues from Real Estate Investments is pegged at $232.40 million, implying a fall of 16.2% from $277.28 million reported in the prior-year period.
Analysts do not seem optimistic about the company’s prospects ahead of the second-quarter earnings release. The Zacks Consensus Estimate for quarterly EPS has been revised 10.6% southward to 84 cents over the past month. Moreover, the figure suggests a 54.1% fall from the prior-year quarter’s tally.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings surprise for CBRE Group this season. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: CBRE has an Earnings ESP of -6.59%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CBRE currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
We now look forward to the earnings releases of other stocks from the real estate operation industry, like FirstService FSV and RE/MAX Holdings RMAX, slated to report on Jul 27 and Aug 2, respectively.
The Zacks Consensus Estimate for FirstService’s second-quarter 2023 EPS stands at $1.33, suggesting a year-over-year increase of 18.8%. FSV currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for RE/MAX Holdings’ second-quarter 2023 EPS is pegged at 39 cents, implying a year-over-year decrease of 42.7%. RMAX currently carries a Zacks Rank #2 (Buy).
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