CBRE Group Inc. Earnings: Margins Make a Turnaround After Four Quarters of Shrinking, but Profit Falls

S&P 500 (NYSE:SPY) component CBRE Group Inc. (NYSE:CBG) reported its results for the first quarter. CB Richard Ellis Group is a commercial real estate services firm which serves the occupiers, owners, lenders, and investors of multi-family and other commercial real estate.

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CBRE Group Earnings Cheat Sheet for the First Quarter

Results: Net income for CBRE Group Inc. fell to $27 million (8 cents per share) vs. $34.4 million (11 cents per share) a year earlier. This is a decline of 21.5% from the year-earlier quarter.

Revenue: Rose 13.9% to $1.35 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: CBRE Group Inc. reported adjusted net income of 14 cents per share. By that measure, the company beat the mean estimate of 13 cents per share. Analysts were expecting revenue of $1.33 billion.

Quoting Management: “We are very pleased with our performance in the seasonally slower first quarter,” said Brett White, chief executive officer of CBRE. “We delivered solid, double-digit top-line growth – and even stronger normalized EBITDA growth — despite the challenges presented by the on-going economic difficulties in Europe and slower investment activity in Asia Pacific. Our performance against this backdrop underscores the strength and diversity of our platform, and our ability to effectively calibrate operating costs to an uncertain market environment.”

Key Stats:

Revenue has risen for the last four quarters. Revenue increased 6.8% to $1.76 billion in the fourth quarter of the last fiscal year. The figure rose 21.2% in the third quarter of the last fiscal year from the year earlier and climbed 21.4% in the second quarter of the last fiscal year from the year-ago quarter.

The company has beaten estiamtes for two quarters in a row. In the fourth quarter of the last fiscal year, it topped expectations with net income of 46 cents versus a mean estimate of net income of 44 cents per share.

Margins were up in the fourth quarter of the last fiscal year, following a drop in the previous quarter. Gross margin grew 1.9 percentage points from the year-earlier quarter to 41.7%. In the third quarter of the last fiscal year, the figure rose 0.8 percentage point to 42.8% from the year earlier quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the second quarter has moved up from 27 cents a share to 28 cents over the last ninety days. For the fiscal year, the average estimate has moved down from $1.27 a share to $1.23 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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