What's in the Offing for CBRE Group's (CBRE) Q2 Earnings?

CBRE Group, Inc. CBRE is slated to release second-quarter 2020 earnings on Jul 31, before the bell. Results are anticipated to display year-over-year declines in revenues and earnings.

In the last reported quarter, this Los Angeles, CA-based commercial real estate services and investment firm delivered a 7.14% earnings surprise. Results reflected better-than-expected revenue growth.

Over the preceding four quarters, the company surpassed estimates on three occasions and missed in the other, the average beat being 2.70%. The graph below depicts this surprise history:

CBRE Group, Inc. Price and EPS Surprise

CBRE Group, Inc. Price and EPS Surprise

CBRE Group, Inc. price-eps-surprise | CBRE Group, Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Factors at Play

CBRE Group is likely to have continued its focus for a better-balanced and more resilient business model in the June-end quarter, shifting the company’s business mix toward a more contractual one.

Moreover, the company has made concerted efforts in recent years to strengthen its Global Workplace Solutions (GWS) segment, which provides a broad suite of integrated, contractually-based services to occupiers of real estate, including facilities management, project management, transaction management and management consulting. In addition, the firm has grown organically and banked on strategic in-fill acquisitions to boost its service offerings and geographic reach over the years. Strategic reinvestments in the company’s business, specifically on the technology front, also differentiate CBRE Group from its peers.

However, the pandemic has resulted in significant amounts of uncertainty, interruption of business activity and impact on global markets as well as consumer and business sentiments.

In its advisory business, revenues from leasing and property sales are likely to have registered substantial declines. Furthermore, though the company’s GWS business is likely to be comparatively resilient, growth might have been restrained given the economic uncertainty and operational challenges on-boarding clients under shelter-in-place orders.

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $5.18 billion, suggesting a decline of 9.4% year on year.

The Zacks Consensus Estimate for second-quarter fee revenues from Advisory Services is currently pinned at $1,402 million, indicating a decline from the prior quarter’s $1,674 million. However, the estimate for Global Workplace Solutions’ fee revenues is $847 million, suggesting an increase from the previous quarter’s $808 million. Fee revenues from Real Estate Investments are estimated at $234 million in the to-be-reported quarter, calling for a sequential increase from the first quarter’s $211 million.

CBRE Group’s activities during the April-June period were inadequate to win analysts’ confidence. The Zacks Consensus Estimate for quarterly earnings remained unchanged at 33 cents over the past month. The figure also suggests a slump of 59.3% year on year.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict a positive earnings surprise for CBRE Group this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CBRE Group currently carries a Zacks Rank #2 and has an Earnings ESP of -39.39%.

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 quarter:

Healthcare Trust of America, Inc. HTA, scheduled to report quarterly numbers on Aug 6, currently has an Earnings ESP of +0.96% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

SBA Communications Corporation SBAC, set to release earnings results on Aug 3, currently has an Earnings ESP of +4.48% and carries a Zacks Rank of 3.

National Storage Affiliates Trust NSA, slated to announce second-quarter figures on Aug 6, currently has an Earnings ESP of +0.44% and holds a Zacks Rank of 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.

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