CBRE Group: "Rolls Royce of Real Estate"

05/02/2017 2:50 am EST

Focus: REAL ESTATE

Todd Shaver

Founder and Editor-in-Chief, BullMarket.com

Real estate firm CBRE (CBG) delivered a good quarter. It was a clean beat; EPS of $0.43 came in well-ahead of the $0.33 consensus, as expenses trended materially below expectations, notes Todd Shaver, editor of BullMarket.com.

CBRE Group’s resilient first quarter result validated the persistent strength of the commercial real estate cycle and the company’s first-rate global platform. Europe, Middle East and Africa as well as Asia stood out for the company. 

The company has a strong outlook. Management commented that it was not making any adjustments to its 2017 earnings outlook of $2.40. The backdrop remains favorable as rates have retreated, the election fallout has stabilized, global economies are growing and new construction remains strong.

M&A is emerging again. This could be a big boost for the company. The company closed two investments in the quarter, and an additional one at quarter end. 

Management suggested that after a year of remaining mostly absent from the acquisition markets, pricing was becoming more rational again, suggesting we could see slightly more activity from the company. 

With a balance sheet that remains healthy, with in excess of $3 billion of dry powder on hand, management could step on the gas if they choose to.

CBRE Group is the Rolls Royce of real estate. With nearly $3.00 in EPS due in 2018 with upside from possible M&A, the current price in the mid $30s sure looks like a cheap value to us.

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