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CBRE Group (CBG) to Report Q3 Earnings: What's in the Cards?

CBRE Group, Inc. CBG is slated to report third-quarter 2017 results on Nov 3, before the market opens.

Last quarter, this Los Angeles, CA-based commercial real estate services and investment firm delivered a 22.6% positive earnings surprise. Results indicate strength in regional services business and solid organic growth in global occupier outsourcing business, and benefit from cost-control efforts.

In fact, CBRE has a decent record of earnings surprise, having surpassed estimates in each of the trailing four quarters, with a positive average surprise of 18.7%. 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 24.9% year to date, outperforming the industry’s gain of 14.6%.

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

Factors to Consider

CBRE’s broad range of real estate products and services, and extensive knowledge of domestic and international real estate markets are likely to drive its top-line growth in the to-be-reported quarter.

Results are likely to reflect strength in regional services business, growth in global occupier outsourcing business as well as gains from the company’s cost containment efforts. Also, the company expects positive earnings growth in the second half from its combined investment management and development services businesses.  

Also, strategic in-fill acquisitions play a key role in expanding its geographic coverage and enhancing CBRE’s service offerings, which are anticipated to prove conducive to the company’s growth. It is also anticipated to experience improvement in operational efficiencies in the quarter under review.

Nevertheless, intense competition from international, regional and local players, along with uneasiness in certain economies and unfavorable foreign currency movement, might mar the company’s top-line performance to some extent.

Amid these, the Zacks Consensus Estimate for third-quarter revenues is currently pegged at $3.42 billion, indicating projected growth of 7.1% year over year. Moreover, the estimate for revenues from the Americas segment is nearly $1.87 billion, the same form Europe, the Middle East and Africa (EMEA) segment is estimated at $1.03 billion, while Asia Pacific revenues estimate is pegged at $404 million.  

However, CBRE’s activities during the quarter could not gain adequate analyst confidence. Consequently, the Zacks Consensus Estimate for the third quarter remained unchanged at 54 cents, over the past week.  

Earnings Whispers

Our proven model does not conclusively show that CBRE will likely beat estimates this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. However, that is not the case here as you will see below.

Zacks ESP: The Earnings ESP for CBRE is 0.00%. This is because the Most Accurate estimate of 54 cents matches the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CBRE’s Zacks Rank #1 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.

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:

LGI Homes, Inc. LGIH, expected to release quarterly numbers around Aug 7, has an Earnings ESP of +7.78% and a Zacks Rank #2.

Lexington Realty Trust LXP, slated to release third-quarter results on Nov 7, has an Earnings ESP of +2.34% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

RLJ Lodging Trust RLJ, scheduled to release earnings on Nov 8, has an Earnings ESP of +1.35% and a Zacks Rank #3.

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