We are upgrading our recommendation on CBRE to Neutral from
Underperform following better-than-expected first-quarter results.
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. 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 forward. 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 company and would help it to
enhance its market share.
Headquartered in Los Angeles, CBRE Group, Inc., is a commercial
real estate services and investment firm, offering a wide range of
services to tenants, owners, lenders and investors in office,
retail, industrial, multi-family and other types of commercial real
estates in all major metropolitan areas across the globe. The
services include valuation, real estate investment management,
commercial property and corporate facilities management, tenant
representation, occupier and property/agency leasing, property
sales, commercial mortgage origination and servicing, capital
markets (equity and debt) solutions, development services and
proprietary research. Revenues are generated by the company from
management fees on a contractual and per-project basis, as well as
from commissions on transactions.
CBRE reports its operating results under 5 segments: the
Americas, EMEA (Europe, the Middle East and Africa), the
Asia-Pacific, Global Investment Management and Development
The Americas is the largest segment of operations and provides a
wide range of services throughout the U.S., as well as in the
largest metropolitan regions of Canada and key markets of Latin
The EMEA segment operates in 40 countries, with its largest
operations in the UK, France, Spain, Germany, the Netherlands and
Italy. Within EMEA, services are organized along the same lines as
in the Americas, including brokerage, investment properties,
corporate services, valuation/appraisal services, asset management
services and facilities management among others.
The Asia Pacific segment operates in 13 countries, primarily
China, Hong Kong, India, Japan, Singapore, South Korea, Australia
and New Zealand.
The Global Investment Management segment offers investment
management services to clients who seek to generate returns and
diversification through direct and indirect real estate investments
across North America, Europe and Asia.
The Development Services segment provides commercial real estate
development and investment services primarily in the U.S.
The full-year 2013 revenue contribution as per the segments is
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