CBRE Group, Inc. CBRE is slated to release fourth-quarter and full-year 2020 earnings on Feb 23, before the bell. Results are anticipated to display year-over-year declines in revenues and earnings.
In the last reported quarter, this Los Angeles, CA-based commercial real estate services and investment firm delivered a 65.91% earnings surprise. Despite the pandemic’s adverse impact on property leasing and sales, the company benefited from the “resilient aspects” of its business and efforts to align expenses with decline in market demand.
Over the preceding four quarters, the company surpassed estimates on three occasions and missed in the other, the average beat being 22.06%. The graph below depicts this surprise history:
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 prior to this announcement.
Factors at Play
CBRE Group is likely to have continued its focus for a better-balanced and more resilient business model during the December-end quarter, shifting the company’s business mix toward a more contractual one.
Moreover, the company has made efforts in recent years 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.
In addition, the firm has grown organically and banked on strategic in-fill acquisitions to boost its service offerings and geographic reach over the years. Strategic investments in the company’s business, specifically on the technology front, also differentiate CBRE Group from its peers.
Nonetheless, the pandemic has given rise to significant amounts of uncertainty, interruption of business activity and impact on global markets as well as consumer and business sentiments. Amid these, the global capital market transaction activity was affected during the fourth quarter.
The company expected the transaction business to recover more gradually. In addition, CBRE Group is likely to have continued to witness the pandemic’s impact related to delays in securing and on boarding new GWS clients. Nevertheless, in the GWS business, growth in contractual facilities management and project management revenue might have offset continued weakness in GWS transaction.
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $6.54 billion, suggesting a decline of 8.1% year on year.
The Zacks Consensus Estimate for fourth-quarter fee revenues from Advisory Services is currently pinned at $1,872 million, indicating an increase from the prior quarter’s $1,521 million, but down from the prior-year quarter’s $2,548 million.
The estimate for Global Workplace Solutions’ fee revenues is $911 million, suggesting an increase from the previous quarter’s $838 million as well as up from the year-ago quarter’s $877 million.
Fee revenues from Real Estate Investments are estimated at $218 million in the to-be-reported quarter, calling for a rise from the third quarter’s $170 million, but down from the year-ago period’s $247 million.
CBRE Group’s activities during the October-December period were adequate to win analysts’ confidence. The Zacks Consensus Estimate for quarterly earnings moved up a cent to 96 cents over the past month. Nonetheless, the figure suggests a decline of 27.3% year on year.
For the full year, the Zacks Consensus Estimate for earnings per share has been revised 2 cents upward to $2.79 over the past month. The figure, however, calls for a 24.8% decrease year on year. Revenues are projected to be down 1.8% year over year to $23.46 billion.
Here is what our quantitative model predicts:
Our proven model predicts a positive 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
CBRE Group carries a Zacks Rank #3 and has an Earnings ESP of +10.42%.
Other Stocks to Consider
Here are a few other stocks in the broader real estate sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:
American Tower Corporation AMT, set to report quarterly numbers on Feb 25, currently has an Earnings ESP of +7.49% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Life Storage, Inc. LSI, slated to release earnings figures on Feb 22, has an Earnings ESP of +0.43% and holds a Zacks Rank of 3, currently.
National Storage Affiliates Trust NSA, scheduled to announce fourth-quarter results on Feb 22, has an Earnings ESP of +4.30% and carries a Zacks Rank of 2 at present.
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