Yahoo Finance CBRE Group (CBRE) Beats Q1 Earnings, Reaffirms 2024 Outlook
CBRE Group Inc. CBRE reported first-quarter 2024 core earnings per share (EPS) of 78 cents, ahead of the Zacks Consensus Estimate of 69 cents.
Results reflect growth in its resilient lines of business. Global Workplace Solutions (“GWS”) experienced strong business wins, though higher costs and one-time expenses affected margins. The leasing business performed well due to office leasing growth on a worldwide basis amid a resilient economy and progress on return-to-office plans. However, property sales transaction activity remained affected amid the persistent inflation that kept interest rates higher than expected.
However, on a year-over-year basis, core EPS declined 14.8% year over year.
Quarterly revenues were up 7.1% year over year to $7.94 billion but compared unfavorably with the Zacks Consensus Estimate of $8.1 billion.
Net revenues increased 6.3% (6.1% in local currency) year over year to $4.44 billion. However, core EBITDA fell 20.3% (20.0% in local currency) to $424 million.
Quarter in Detail
CBRE Group’s Advisory Services segment reported a year-over-year revenue increase of 2.7% (2.9% in local currency) to $1.9 billion. Our estimate was pegged at $2.14 billion.
Global leasing revenues rose 4% (same local currency), driven by leasing revenue growth in every region. The company noted that with a resilient economy and progress on return-to-office plans, office leasing revenues grew in the double digits. Global sales revenues fell 11% (10% in local currency) as sales activity remained under pressure amid high interest rates and tight credit conditions.
However, mortgage origination revenues rose 34% (33% local currency) due to higher loan fees and interest earnings on escrow balances.
The GWS segment registered a year-over-year increase of 8.8% (8.5% in local currency) in revenues to $5.8 billion. Our estimate was pegged at $5.69 billion.
This marked the second consecutive quarter of strong business wins with a healthy balance between new clients and expansions. The company also noted that its pipeline remained elevated, driven by the industrial & logistics, media & technology and financial & professional services sectors.
Paced by the sustained strength in the Local business, Facilities management net revenues rose 11% (same local currency). Project management net revenues increased 7% (same local currency). However, higher costs and one-time expenses led to a decline in the segment’s operating profit margin compared to the prior-year period.
The Real Estate Investments segment experienced an increase of 1.9% (0.5% in local currency) in revenues to $228 million. Our estimate was pegged at $240.5 million.
At the end of the first quarter of 2024, assets under management decreased to $3.5 billion from year-end 2023 to $144.0 billion due to lower asset values and an adverse foreign currency movement.
In the first quarter of 2024, CBRE acquired J&J Worldwide Services, Inc., which is a provider of engineering services, base support operations and facilities maintenance for the U.S. federal government, for a total cash and non-cash consideration of $820 million.
Balance Sheet Position
CBRE Group exited the first quarter of 2024 with cash and cash equivalents of $1.04 billion, down from $1.27 billion as of Dec 31, 2023.
As of Mar 31, 2024, CBRE Group had $3.9 billion in total liquidity. This comprised nearly $1.04 billion in cash in addition to the ability to borrow a total of approximately $2.85 billion under its revolving credit facilities, net of any outstanding letters of credit. The company’s net leverage ratio was 1.47 as of the same date, significantly less than CBRE’s primary debt covenant of 4.25X.
During the March-end quarter, the company did not repurchase any of its common stock. As of Mar 31, 2024, it had $1.5 billion of stock-repurchase capacity remaining under its authorized buyback program.
Outlook
For the full-year 2024, CBRE maintained its core EPS outlook in the range of $4.25-$4.65. The company expects nearly 70% of its full-year core EPS to be achieved in the second half of 2024. The Zacks Consensus Estimate for the same is currently pegged at $4.45.
Currently, CBRE Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CBRE Group, Inc. Price, Consensus and EPS Surprise
CBRE Group, Inc. price-consensus-eps-surprise-chart | CBRE Group, Inc. Quote
Upcoming Releases
It’s time to look forward to two stocks from the real estate operation industry — Jones Lang LaSalle Incorporated JLL and Kennedy-Wilson Holdings, Inc. KW. While Jones Lang LaSalle is slated to report quarterly numbers on May 6, Kennedy-Wilson Holdings is scheduled to come up with its figures on May 8.
The Zacks Consensus Estimate for Jones Lang LaSalle’s first-quarter 2024 EPS stands at 85 cents, which suggests a year-over-year increase of 30.8%. JLL currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for Kennedy-Wilson Holdings’ first-quarter 2024 loss per share is pegged at 42 cents, which implies a year-over-year decrease of 40%. KW currently carries a Zacks Rank of 3.
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