CBRE Group To Report Q4 Earnings: What's In The Cards?

CBRE Group, Inc. CBG is slated to report fourth-quarter and full-year 2017 results on Feb 8, before the market opens. While the company's revenues are expected to grow, earnings will likely remain flat year over year.

Last quarter, this Los Angeles, CA-based commercial real estate services and investment firm delivered an 18.5% positive earnings surprise. Results indicated strength in all three of its regional services businesses and solid growth in occupier outsourcing business.

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 22.3%. 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 8.3% in the past three months, outperforming the loss of 3.0% incurred by the industry.

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

Factors to Consider

CBRE has a wide spectrum of real estate products and services, and boasts an extensive knowledge of domestic and international real estate markets. These are anticipated to drive its top-line growth in the to-be-reported quarter.

Results are likely to reflect strength in the regional services business, growth in global occupier outsourcing business as well as gains from the company's cost-containment efforts. Also, strategic in-fill acquisitions play a key role in widening its geographic coverage, as well as expand and reinforce service offerings, which are anticipated to be conducive to the company's growth. It is also expected to experience improvement in operational efficiencies in the quarter under review.

Amid these, the Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $4.14 billion, indicating projected growth of nearly 8.2% year over year. Moreover, the estimate for revenues from the Americas segment is $2.3 billion, denoting projected growth of 11.5% year over year. The same for the Europe, the Middle East and Africa (EMEA) segment is estimated at nearly $1.2 billion, indicating expected increase of 1.3% from the prior year. Asia Pacific revenues are pegged at $507 million, denoting projected expansion of 9.5% from the prior year period.  

However, the company noted that in fourth-quarter 2016, the company's performance in its regional services businesses was exceptionally strong, with adjusted EBITDA up 30% from the prior year. Further, it expects adjusted EBITDA in combined Investment Management and Development Services businesses to be down year over year in the fourth quarter. Also, intense competition from international, regional and local players might mar the company's top-line performance to some extent.

However, CBRE's activities during the quarter could not gain adequate analyst confidence. Consequently, the Zacks Consensus Estimate for the fourth quarter edged down 1.1% to 93 cents in a month's time.  
 

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