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CBRE Group Reaches 52-Week High

Zacks Equity Research

Shares of CBRE Group Inc. ( CBG) crafted a new 52-week high, touching $25.90 during the trading session on Dec 20. However, the stock closed the session at $25.80, which reflects a solid year-to-date return of 26.7%. The trading volume for the session was 2.6 million shares. 


Despite the strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given its recent acquisitions, estimate revisions over the last 30 days and expected long-term earnings growth of 14.97%. 


Growth Drivers 


CBRE Group has been actively engaged in deals for expanding business in the U.S. and U.K. Most recently, the company disclosed the purchase of the leading facilities cost analytics firm, Whitestone Research Corporation. With this buyout, CBRE Group can leverage on the widely recognized analytical tools in the industry, CostLab – one among Whitestone’s proprietary technologies.


Earlier this month, CBRE Group boosted its service offerings in San Francisco with the purchase of commercial real estate services firm, The CAC Group, which acts as an agent for approximately 18 million square feet while it manages about 11 million square feet of office properties in downtown San Francisco, the greater Bay area and Seattle (including Bellevue).


In the recent past, CBRE Group made a number of acquisitions including CB Richard Ellis Carmody, KLMK Group, Alan Selby & Partners and cracked a deal to acquire U.K.-based commercial building technical engineering services provider, Norland Managed Services Ltd. for boosting its services and widening its corporate outsourcing platform in Europe.


Though CBRE Group’s third-quarter 2013 results missed expectations, its adjusted earnings grew 15% from the prior-year quarter aided by a rise in revenues. Property sales remained the leading growing service line in the third quarter, while leasing growth accelerated and occupier outsourcing posted double-digit growth.


We believe these opportunistic acquisitions would be solid growth drivers, supplementing the company’s organic expansion. Moreover, the company's investments in people and systems augur well.


Estimate Revisions Show Potency 


Owing to these positives, the company witnessed a rise in estimates in recent times. Over the last 30 days, though the Zacks Consensus Estimate for 2013 remained flat at $1.43 per share (within the guidance range provided by CBRE Group), for 2014 it moved north 1.2% to $1.70 per share.


Investors interested in the real estate operations industry may consider stocks like E-House (China) Holdings Ltd ( EJ), FirstService Corp. ( FSRV) and Kennedy-Wilson Holdings, Inc. ( KW). All these carry a Zacks Rank #1 (Strong Buy).

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Read the Full Research Report on KW
Read the Full Research Report on FSRV
Read the Full Research Report on EJ

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