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What's in the Offing for CBRE Group (CBRE) in Q4 Earnings?

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CBRE Group, Inc. CBRE is slated to release fourth-quarter 2021 and full-year earnings on Feb 24, before the opening bell. Results are anticipated to display year-over-year growth in revenues and earnings.

In the last reported quarter, this Dallas, TX-based commercial real estate services and investment firm delivered a 15.83% earnings surprise. Results reflected better-than-expected revenues.

Over the preceding four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 41.02%. The graph below depicts this surprise history:

CBRE Group, Inc. Price and EPS Surprise

CBRE Group, Inc. Price and EPS Surprise
CBRE Group, Inc. Price and EPS Surprise

CBRE Group, Inc. price-eps-surprise | CBRE Group, Inc. Quote

Let’s see how things have shaped up before this announcement.

Factors at Play

During the December-end 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. Moreover, in recent years, the company has made efforts to strengthen its Global Workplace Solutions (GWS) segment, which provides a broad suite of integrated, contractually based services to occupiers of real estate, including facilities management, project management, transaction management and management consulting.

The firm has grown organically and banked on strategic in-fill acquisitions to boost its service offerings and geographical reach over the years. During the fourth quarter, CBRE formed a strategic partnership and purchased a 60% ownership interest in Turner & Townsend, a U.K.-based global leader in program, project and cost management. Moreover, strategic investments in the company’s business, specifically on the technology front, also differentiate CBRE Group from its peers.

These efforts are likely to have aided the company’s performance during the quarter under consideration. Broad diversification across property types, lines of business, geographic markets and clients as well as disciplined expense management are anticipated to have helped the company in the quarter under consideration.

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $8.12 billion, suggesting an increase of 17.5% year over year.

However, management expected moderate sales and leasing growth rates in the fourth quarter than what has been witnessed in recent quarters because of prior-year comparisons becoming tougher.

The Zacks Consensus Estimate for fourth-quarter fee revenues from Advisory Services stands at $2,970 million, indicating an increase from the prior quarter’s $2,412 million and the prior-year quarter’s $2,218 million.

The estimate for GWS’ fee revenues is $1,812 million, suggesting growth from the previous quarter’s $1,552 million and the year-ago quarter’s $906 million.

Fee revenues from Real Estate Investments are estimated at $278 million for the to-be-reported quarter, calling for an increase from the third quarter’s $224 million but down from the year-earlier period’s $289 million.

Before the quarterly earnings release, analysts seem to be optimistic about the company’s prospects as the Zacks Consensus Estimate for the October-December quarter’s earnings per share (EPS) has moved 2 cents north to $1.77 over the past month. It also suggests a 22.07% year-over-year increase.

For full-year 2021, management expected global advisory sales revenues to exceed 2019’s peak by about 15% and global leasing to fall 5% or so relative to the prior peak. Across the rest of its advisory business, management expected low double-digit revenue growth on a combined basis. In GWS, management projected mid-to-high-single digit net revenue growth, with the segment’s operating profit growth of 20% or more year over year before contributions from the Turner & Townsend transaction. The margin is likely to have benefited from a mix shift to higher margin services.

For the Real Estate Investments segment, management projected revenues to rise in the low-to-mid teens range and operating profit to increase by at least 30% and expected global development operating profit to roughly triple $122 million generated in 2019.

For the full year, the Zacks Consensus Estimate for EPS has been revised 3 cents upward to $5.33 over the past month. The figure indicates a 63% increase year over year on revenues of $27.32 billion.

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 #2 and has an Earnings ESP of +8.84%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are two stocks from the real estate operations industry — Jones Lang LaSalle Incorporated JLL and Cushman & Wakefield PLC CWK — that you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.

Jones Lang LaSalle Incorporated, slated to release earnings on Feb 28, has an Earnings ESP of +9.23% and holds a Zacks Rank of 2 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cushman & Wakefield PLC, scheduled to announce quarterly results on Feb 24, has an Earnings ESP of +6.45% and sports a Zacks Rank of 1 at present.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Jones Lang LaSalle Incorporated (JLL) : Free Stock Analysis Report

CBRE Group, Inc. (CBRE) : Free Stock Analysis Report

Cushman & Wakefield PLC (CWK) : Free Stock Analysis Report

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