Ushering in good news for
CBRE Group Inc.
), Standard & Poor's Rating Services (S&P) has upgraded its
rating on the company's debt. Specifically, the company's secured
debt rating has been raised to investment grade, BBB- from the
earlier rating of BB while its unsecured debt rating was also
enhanced to BB from B+.
Moreover, CBRE's enterprise rating has been increased to BB+ from
BB with a positive outlook. The upgrade reflects the company's
conservative financial management as well as an uptick in
Not only S&P, the other rating agency - Moody's Investors
Service - also announced its optimistic outlook on CBRE in the
recent past. In fact, Moody's affirmed CBRE's Ba1 debt rating and
changed its rating outlook for CBRE to positive from stable. Their
optimistic outlook was based on the company's enhanced revenue
diversity and conservative financial management.
We view the rating upgrades from the credit rating agencies as a
positive for the stock as these play an important part in retaining
investor confidence in the stock as well as enhancing
creditworthiness in the market.
As a matter of fact, aided by higher revenues, CBRE Group's
first-quarter 2014 adjusted earnings per share came in well ahead
of the Zacks Consensus Estimate and up 56% year over year. Notably,
during the quarter, the company inked outsourcing contracts with
international occupiers like Alibaba Group and
With market conditions continuing to improve, we believe that
opportunistic acquisitions would serve as growth drivers,
supplementing the company's organic growth. Improving property
sales, leasing and outsourcing business also augur well going
Despite the regulatory limits on GSEs lending and unfavorable
foreign currency movement, we believe that the strategic
investments in people and platform stand good for the long-term
perspective of this Zacks Rank #2 (Buy) stock and would help it to
enhance its market share.
Investors interested in the real estate operations sector may
consider stocks like
). Both these stocks sport the same rank as CBRE.
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