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Why Should You Add CBRE Group (CBG) Stock to Your Portfolio?

CBRE Group, Inc. CBG is focused on improving its business with strategic buyouts. In June, the company inked a definitive agreement to acquire a majority interest in Caledon Capital Management Inc, a Toronto-based infrastructure and private equity solutions provider. This acquisition is an excellent addition to the existing array of real estate and investment solutions offered by CBRE Global Investors.

Further, in May 2017, the company announced the acquisition of the full-service commercial real estate services firm – Brenner Real Estate Group (BREG) – in South Florida. This move strengthened the company’s capabilities in the region.

Not only that, CBRE continues to display robust fundamentals and improving prospects. In first-quarter 2017, the company delivered a positive earnings surprise of 30.3%. The figure also came in 19% higher than the prior-year tally. Results highlight better-than-expected growth in revenues.

In addition, this Zacks Rank #2 (Buy) stock has risen 17.0% in the past six months compared with 10.7% growth recorded by the Zacks categorized Real Estate – Operations industry.



Why a Solid Choice?

Revenue Strength: CBRE’s top line has been exhibiting strength for the past several years. In fact, from 2003 to trailing twelve months Q1 2017, the company’s revenue has witnessed a CAGR of 16%. Additionally, CBRE’s projected sales growth is 6.1% for 2017.

Moreover, strategic in-fill acquisitions have played a vital role in widening its geographic coverage, as well as expanding and reinforcing service offerings. Furthermore, CBRE opts for larger, transformational deals driven by macro policies. The company has completed over 110 acquisitions since 2003, including five large acquisitions. As market conditions continue to improve, we believe that these opportunistic acquisitions would serve as growth drivers, supplementing CBRE’s organic growth.

Cash Flow Growth: CBRE enjoyed historical cash flow growth (3–5 years) of 20.6%, which comfortably exceeded 10.4% growth registered by the industry. Also, its current cash flow growth of 13.9% compares favorably with the 4.4% decline estimated for the industry.

EPS Growth: CBRE has witnessed 10.7% growth in EPS in the last three to five years against the industry’s 7.4%. Its projected EPS growth rate for 2017 is around 4.5%, which is better than the 3.1% growth projected for the industry. In addition, EPS is estimated to grow at a rate of 5.6% in 2018.

Superior ROE: CBRE’s Return on Equity (ROE) ratio is 25.4% compared with the industry’s average of 4.2%. This indicates that the company reinvests more efficiently compared to the industry.

Key Picks

Investors interested in the real estate industry may consider stocks like City Developments Limited CDEVY, Henderson Land Development Company Limited HLDCY and Jones Lang LaSalle Incorporated JLL. All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for City Developments’ 2017 earnings moved up 6.1% to 52 cents, over the past 60 days.

For Henderson Land Development Company, the Zacks Consensus Estimate for 2017 climbed 2.3% to 44 cents, over the past seven days.

JLL has long-term earnings growth rate of 11.5%.

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Jones Lang LaSalle Incorporated (JLL): Free Stock Analysis Report
 
Henderson Land Development Co. (HLDCY): Free Stock Analysis Report
 
CBRE Group, Inc. (CBG): Free Stock Analysis Report
 
City Developments Ltd. (CDEVY): Free Stock Analysis Report
 
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