CB Richard Ellis Group Inc. (CBG), the world’s largest commercial real estate services company (on the basis of 2010 revenues), reported fiscal 2011 first quarter recurring earnings of 13 cents per share, which marginally beat the Zacks Consensus Estimate by a penny.
We cover below the results of the recent earnings announcement, as well as the subsequent analyst estimate revisions and the Zacks ratings for the short-term and long-term outlook for the stock.
Earnings Report Review
CB Richard Ellis reported first quarter 2011 revenues of $1.2 billion compared with $1.0 billion in the year-earlier quarter, reflecting an increase of 16%. The strong quarterly revenues marked a solid start to fiscal 2011 as the first quarter has been historically the seasonally weakest quarter for the company. Total revenues in the reported quarter were in line with the Zacks Consensus Estimate.
First quarter 2011 EBITDA (earnings before interest, tax, depreciation, and amortization) increased 51% to $113.0 million, compared to $75.0 million in the year-ago quarter. The better-than-expected results were primarily due to improved performance across almost all geographic regions and business lines against a backdrop of steadily improving global market fundamentals.
(Read our full coverage on this earnings report: CB Richard Ellis Beats Estimates)
Earnings Estimate Revisions- Overview
Fiscal earnings estimates have moved up for CB Richard Ellis since the earnings release, meaning that analysts are bullish about the long-term performance of the company. Let’s dig into the earnings estimate details.
Agreement of Estimate Revisions
In the last 7 days, fiscal 2011 earnings estimates were raised by 1 analyst out of 6 covering the stock, while none have lowered the same. For fiscal 2012, 2 out of 7 analysts covering the stock have revised their estimates upward, while 1 has lowered it. This indicates a positive directional movement for the long-term fiscal year earnings.
Magnitude of Estimate Revisions
Earnings estimates for fiscal 2011 have remained static in the last 7 days at $1.11. For fiscal 2012, earnings estimates have increased by 2 cents to $1.56, which indicates that while fundamentals are gradually improving, they were still impacted by the challenging broader economic trends.
Moving Forward
The long-term earnings estimate picture for CB Richard Ellis is neutral. Management further observed that although the quarterly results were in line with the company’s expectations and signified a gradual improvement in market fundamentals, global macroeconomic issues contributed to a slower pace of recovery. However, management remained confident of leveraging on its unique and industry-leading platform to continue its growth momentum in the coming quarters as well.
CB Richard Ellis is the global market leader in commercial real estate brokerage and advisory services for property leasing and sales, forecasting, valuations, origination and servicing of commercial mortgage loans, as well as project and real estate investment management. The company has a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets that enable it to operate as a single-source provider of real estate solutions.
In addition, CB Richard Ellis has a hard-to-replicate intellectual capital and technology resources that develop and deliver superior analytical, research and client service tools to its professionals enabling it to meet diverse client needs. However, the company faces stiff competition from regional as well as international players in the market that limits its profitability.
Currently, we maintain our long-term ‘Neutral’ rating on CB Richard Ellis, which presently has a Zacks #3 Rank that translates into a short-term ‘Hold’ recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1-3 months. We also have a ‘Neutral’ rating and a Zacks #1 Rank (short-term ‘Strong Buy’) for NorthStar Realty Finance Corp. (NRF), one of the peers of CB Richard Ellis.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at http://www.zacks.com/education/
CB RICHARD ELLS (CBG): Free Stock Analysis Report
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