What's in the Offing for CBRE Group (CBRE) in Q3 Earnings?
CBRE Group CBRE, the global leader in real estate services, is gearing up to announce its third-quarter 2023 earnings on Oct 27 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 6.49%. Despite the severely constrained capital availability affecting its sales revenues, CBRE benefited from the expansion of its resilient business in recent years.
Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate on three occasions and missed on the other, the average beat being 5.74%. 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 third quarter, CBRE Group is likely to have continued its focus on a better-balanced and more resilient business model, shifting the company’s business mix to a more contractual one. The broad diversification across property types, lines of business, geographic markets and clients and disciplined expense management are anticipated to have helped CBRE in the quarter under consideration.
However, macroeconomic uncertainty and an adverse impact on commercial real estate transactions are major concerns. The company’s performance is likely to have been affected by rising interest rates, inflationary pressure and a choppy geopolitical environment.
Investors have become more cautious, which has been affecting the transaction closing time and pricing. Debt markets are not only adhering to a cautious stance but also there is an increase in underwriting requirements, affecting transaction activities. Further, there is stiff competition from other industry players. These factors might have deterred the growth tempo to some extent.
However, real estate occupiers, including corporations, public sector entities, healthcare providers and clients from various sectors, have been increasingly outsourcing their real estate needs. The growing demand for outsourcing services presents an opportunity for major industry players like CBRE to expand their client base and services. In the third quarter, CBRE Group is likely to have capitalized on such encouraging trends and experienced growth in the Global Workplace Solutions (“GWS”) segment.
Moreover, CBRE is focusing on technology investments to drive efficiency, deliver differentiated client services and gain market share. Embracing technology is likely to have helped the company navigate the current challenges.
Projections for Q3 2023
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $7.7 billion. This suggests an increase of 2.25% year over year. The consensus estimate for third-quarter 2023 net revenues from Advisory Services stands at $1,969.4 million, indicating an 18.5% decline from the year-ago quarter’s $2,415.0 million. The consensus estimate for the GWS segment’s net revenues is pegged at $2,196.3 million, suggesting an increase of 12.3% from the year-ago quarter’s $1,956.0 million.
We estimate net revenues for the Advisory Services segment to fall 16.5% year over year for the quarter. Our estimate for quarterly net revenues for the GWS segment indicates an increase of 13.8% year over year. Moreover, we expect total revenues from Real Estate Investments to decline 0.4% year over year.
Before the quarterly earnings release, analysts do not seem optimistic about the company’s prospects as the Zacks Consensus Estimate for the July-September quarter’s earnings per share (EPS) has moved south to 69 cents from 81 cents over the past month. It suggests a 38.9% decline year over year.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict 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. However, that is not the case here.
CBRE Group currently carries a Zacks Rank of 5 (Strong Sell) and has an Earnings ESP of +0.36%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Upcoming Releases
It’s time to look forward to two stocks from the real estate operation industry — FirstService Corporation FSV and RE/MAX Holdings, Inc. RMAX. While FirstService Corporation is slated for its earnings release on Oct 26, RMAX is scheduled to report quarterly numbers on Nov 2.
The Zacks Consensus Estimate for FirstService Corporation’s third-quarter 2023 EPS stands at $1.29, suggesting a year-over-year increase of 10.3%. FSV currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RE/MAX Holdings’ third-quarter 2023 EPS is pegged at 36 cents, implying a year-over-year decrease of 35.7%. RMAX currently carries a Zacks Rank of 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Conclusion
As CBRE Group prepares to release its third-quarter 2023 earnings, it faces a challenging landscape shaped by rising interest rates, inflationary pressures and macroeconomic uncertainty. However, the increasing trend of outsourcing real estate needs and investments in technology can provide CBRE with growth opportunities in these uncertain times. Investors should closely monitor these factors and the company's strategies to adapt to evolving market conditions and capitalize on emerging opportunities.
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RE/MAX Holdings, Inc. (RMAX) : Free Stock Analysis Report
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CBRE Group, Inc. (CBRE) : Free Stock Analysis Report
