Still Neutral on CBRE - Analyst Blog
On May 27, 2013, we reiterated our long-term recommendation on CBRE Group Inc. ( CBG ) at Neutral. The decision is based on the company's successful execution of strategic initiatives, though stiff competition from regional as well as international players remains a plausible concern.
CBRE's first-quarter 2013 adjusted earnings came in at 16 cents per share, missing the Zacks Consensus Estimate by a penny but exceeding the prior-year quarter figure of 14 cents. The year-over-year increase is attributable to strong top-line growth across all operating regions, especially Europe. However, a weaker yen acted as the dampener.
Notably, the Zacks Rank #2 (Buy) stock has a broad range of real estate products and services and an extensive knowledge of domestic and international real estate markets, which helped it perform well in the first quarter. Additionally, the company's outsourcing business continued to flourish, with an increasing clientele. This further helped CBRE to achieve a compound annual growth rate (CAGR) of 12% since 2004 in global square feet managed.
However, CBRE faces cut-throat competition from international, regional, and local players in the market. Therefore, it has to continually invest in value drivers to guard against competitive pressure. Further, given CBRE's international presence, the company often faces unfavorable foreign currency movements, impacting its top-line growth.
Following the release of first-quarter 2013 results, over the last 30 days, the Zacks Consensus Estimate for 2013 remained stable at $1.44 per share. For 2014, it went down by 1.2% to $1.68 per share.
Other Stocks to Consider
Better performing REITs include CommonWealth REIT ( CWH ), CubeSmart ( CUBE ) and Douglas Emmett Inc ( DEI ). CommonWealth REIT carries a Zacks Rank #1 (Strong Buy) and last two stocks carry a Zacks Rank #2 (Buy).
CBRE GROUP INC (CBG): Free Stock Analysis Report
CUBESMART (CUBE): Free Stock Analysis Report
COMMONWEALTH RE (CWH): Free Stock Analysis Report
DOUGLAS EMMETT (DEI): Free Stock Analysis Report
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