Aided by higher revenues,
CBRE Group Inc.
) reported first-quarter 2014 adjusted earnings of 25 cents per
share, well ahead of the Zacks Consensus Estimate of 17 cents per
share and up 56% year over year.
On a GAAP basis, CBRE reported earnings of 20 cents per share,
reflecting an 82% hike from 11 cents earned in the prior-year
Revenues came in at $1.9 billion, well ahead of the Zacks
Consensus Estimate of $1.73 billion and up 26% year over year
(y/y). Adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA) came in at $198.8 million,
reflecting an increase of 23% from the prior-year quarter.
Global property sales revenue rose 27% for the quarter while
occupier outsourcing business - Global Corporate Services (GCS) -
revenue increased 61% (reflecting 12% organic growth) and global
leasing revenue climbed 10%.
Despite the decline in lending activity with the U.S. GSEs,
commercial mortgage brokerage revenue increased 13% as a result
of a rise in U.S. loan originations with other capital sources
and hike in loan sales activity.
Quarter in Detail
Geographically, EMEA Region (primarily Europe) was a top
performer with 127% y/y growth in revenue (122% in local
currency), led by solid contributions from the acquisition of
Norland Managed Services Ltd. - the building technical
engineering services provider. This was coupled with double-digit
organic growth across its major business lines as market activity
continued to recover.
CBRE's largest business segment - Americas Region - also
registered double-digit revenue growth (10% y/y). Solid results
were driven by growth in property sales and leasing as well as
the occupier outsourcing business.
Furthermore, helped by continued recovery in property sales, the
Asia Pacific Region reported 8% y/y growth in U.S. dollars (18%
in local currency as foreign currency conversion muted the
company's growth to some extent).
However, revenue remained unchanged year over year at Development
Services (real estate development and investment activities
primarily in the U.S.) while revenue at Global Investment
Management (investment management operations in the U.S., Europe
and Asia) fell 11% y/y. Notably, CBRE signed contracts with 25
new occupier customers and enhanced its service offering with 24
CBRE exited first-quarter 2014 with cash and cash equivalents of
$428.2 million, down from $491.9 million at year-end 2013.
We are encouraged with better-than-expected results at CBRE Group
for the second consecutive quarter. 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 Zacks Rank #3 (Hold) stock and would help it
to enhance its market share.
Other players in the real estate operations industry, which look
attractive at current levels, include
Jones Lang LaSalle Incorporated
). While HFF and Reis carry a Zacks Rank #1 (Strong Buy), Jones
Lang has a Zacks Rank #2 (Buy).
CBRE GROUP INC (CBG): Free Stock Analysis
HFF INC-A (HF): Free Stock Analysis Report
JONES LANG LASL (JLL): Free Stock Analysis
REIS INC (REIS): Free Stock Analysis Report
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