Shares of CBRE Group Inc. (CBG) scaled a new 52-week high of $35.35 on Dec 22. The stock closed at $35.04, reflecting a solid year-to-date return of 33.0%. The trading volume for the session was over 1.6 million shares.
Strategic acquisitions, rating upgrade and encouraging third-quarter results have aided CBRE Group in reaching a new 52-week high in terms of its stock price. But despite scaling such high, we believe that this commercial real estate services and investment firm can prove to be a good choice, given the improving market fundamentals, favorable rate environment and long-term growth expectation of 14%.
Growth Drivers
Strategic buyouts have played a vital role in enhancing CBRE’s geographic coverage as well as broadening its service offerings. With market conditions continuing to improve, we believe that opportunistic acquisitions would serve as growth drivers, supplementing the company’s organic growth and aiding market share gain.
Most recently, CBRE Group announced the acquisition of an Oklahoma-based commercial real estate services firm – CBRE | Oklahoma – which has served as its affiliate since 1999, managing over 18 million square feet in the region. The company also acquired IVI International, Inc. and its related companies. This acquisition, expected to strengthen the company’s existing Valuation and Advisory Services team, would be accretive to CBRE Group.
Moreover, the global credit-rating agency Standard & Poor’s Rating Services (S&P) has upgraded CBRE Group’s corporate rating to Investment Grade (BBB-) with a positive outlook.
Finally, CBRE Group also came up with encouraging third-quarter results. The company’s adjusted earnings of 40 cents per share came in 11% ahead of the Zacks Consensus Estimate and up 33% year over year.
Results were fueled by solid growth in revenues across all global regions. The earnings beat is encouraging and we expect the company to benefit from improving leasing, property sales and outsourcing business, going forward.
Echoing similar sentiments, over the last 30 days, the Zacks Consensus Estimate for both 2014 and 2015 have moved north. While the Estimate for 2014 inched up 0.6% to $1.68, the same for 2015 climbed 1.6% to $1.92. The stock currently carries a Zacks Rank #2 (Buy).
Other Stocks Scaling Highs
Other real estate industry stocks that have scaled 52-week highs on Dec 22 include Jones Lang LaSalle Inc. (JLL), Avalonbay Communities Inc. (AVB) and Essex Property Trust Inc. (ESS).
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