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CBRE Group (CBRE) to Post Q1 Earnings: What's in the Cards?

CBRE Group, Inc.CBRE is slated to report first-quarter 2018 results on May 2, before the market opens. The company is anticipated to have recorded growth in both revenues and earnings, year over year.

In the last-reported quarter, this Los Angeles, CA-based commercial real estate services and investment firm delivered a 6.45% positive earnings surprise. Results indicated strong revenue growth in all three of its global regions. Specifically, the company witnessed solid growth in occupier outsourcing and leasing fee revenues.

In fact, CBRE has a decent record of earnings surprise, having surpassed estimates in each of the trailing four quarters, with an average positive surprise of 19.5%. The graph below depicts this surprise history:

CBRE Group, Inc. Price and EPS Surprise

CBRE Group, Inc. Price and EPS Surprise | CBRE Group, Inc. Quote

CBRE's shares have rallied 16.1% in the past six months, while the industry incurred a loss of 1.1%.

Let's see how things are shaping up for this announcement.

Factors to Consider

CBRE Group's broad range of real estate products and services, and an extensive knowledge of domestic and international real estate markets is likely to have helped retain the solid growth momentum in the first quarter.

Moreover, the company is focused on a better balanced and more resilient business model. In fact, its contractual revenues and leasing, largely recurring over time, constituted 74% of total fee revenues in fourth-quarter 2017 compared with 61% reported in 2006. This trend is expected to have continued into the first quarter as well.

Further, CBRE Group has a flourishing occupier outsourcing business and continues to capitalize on the growth opportunities offered by this category. In addition, solid pipeline growth reflects expanded capabilities.

Amid these, results in first-quarter 2018 are likely to reflect strength in the regional services business, growth in global occupier outsourcing business, as well as benefits from the company's cost-containment efforts. The company is anticipated to have generated decent revenues from leasing business and capital markets.

Also, strategic in-fill acquisitions play a key role in widening this REIT's geographic coverage, as well as expanding and reinforcing service offerings, which are anticipated to have been conducive to growth.

Further, the company is expected to have experienced improvement in operational efficiencies in the quarter to be reported. In fact, its focused investment in technology and data analytics are likely to have driven growth. With continued calculated investments in people and platform, as well as strong client service, CBRE Group is expected to have experienced decent market share gains, riding on the growth trajectory in the first quarter.

In fact, the Zacks Consensus Estimate for first-quarter revenues is currently pegged at $3.34 billion, indicating projected growth of nearly 11.9% year over year. In addition, the Zacks Consensus Estimate for first-quarter earnings is 49 cents, reflecting estimated growth of around 14% year over year. Notably, the earnings estimate remained unchanged over the past week.

Earnings Whispers

Our proven model shows that CBRE Group is likely to beat earnings estimates because it has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP , and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to beat estimates, and CBRE Group has the right mix.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks ESP: The Earnings ESP is +3.59%. This is a meaningful and leading indicator of a likely positive earnings beat.

Zacks Rank: CBRE Group's Zacks Rank #2, when combined with a positive ESP, makes us reasonably confident of an earnings beat this season.

Stocks That Warrant a Look

Here are a few stocks in the broader real estate 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 time around:

JLLJLL , slated to release quarterly numbers on May 8, has an Earnings ESP of +5.87% and a Zacks Rank #3.

Essex Property Trust, Inc.ESS , slated to release earnings on May 2, has an Earnings ESP of +0.05% and a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank stocks here .

HCP Inc.HCP , scheduled to report quarterly numbers on May 3, has an Earnings ESP of +0.22% and a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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