CBRE Group (CBRE) to Post Q3 Earnings: What's in the Cards?

CBRE Group, Inc. CBRE is slated to report third-quarter 2019 results on Nov 6, before the market opens. Results are anticipated to display year-over-year growth in revenues, while earnings might display a decline.

In the last reported quarter, this Los Angeles, CA-based commercial real estate services and investment firm delivered a 3.85% positive earnings surprise. Results indicated strong revenue growth, driven by leasing, occupier outsourcing and U.S. capital markets. CBRE surpassed estimates in each of the trailing four quarters, with an average beat of 12.54%. 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-eps-surprise | CBRE Group, Inc. Quote

In the to-be-reported quarter, CBRE Group is likely to have continued with its focus for a better-balanced and more resilient business model, shifting the company’s business mix toward a more contractual one.

Moreover, over the years, the firm has grown organically and banked on strategic in-fill acquisitions to boost its service offerings and geographic reach. Strategic reinvestment in the company’s business, specifically on the technology front, has also differentiated CBRE Group from its peers. With an expanded capability to service, its number of large clients is likely to have remained high in the September-end quarter.

Further, the company’s Global Workplace Solutions 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, is likely to have witnessed growth in the quarter under review. This is because occupiers of real estate are increasingly opting for outsourcing and depending on the expertise of third-party real estate specialists for improvement in execution and efficiency.

Amid these, the Zacks Consensus Estimate for the third-quarter revenues is currently pegged at $5.73 billion, suggesting nearly 9% year-over-year growth.

However, although there is ample availability of relatively low-cost financing, investment volumes are expected to have remained soft following a record 2018 as investors have adopted a cautious approach. In addition, trade-war tensions, political uncertainties and volatile equity markets might have added to the woes, affecting transaction levels.

CBRE Group’s activities during the July-September quarter were inadequate to win analysts’ confidence. The Zacks Consensus Estimate for third-quarter earnings moved south 3.7% over the last seven days to 78 cents. This also reflects an estimated decline of around 1.3%, year over year.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although CBRE Group carries a Zacks Rank of 2, its Earnings ESP of -3.21% makes surprise prediction difficult.

Stocks That Warrant a Look

Here are a few stocks in the broader real 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:

Paramount Group, Inc. PGRE, scheduled to release earnings on Nov 6, has an Earnings ESP of +1.41% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Realogy Holdings Corp. RLGY, slated to report third-quarter results on Nov 7, has an Earnings ESP of +2.41% and holds a Zacks Rank of 1.

Senior Housing Properties Trust SNH, set to release quarterly numbers on Nov 7, has an Earnings ESP of +3.23% and carries a Zacks Rank of 2, currently.

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