Morningstar | CBRE Posts Double Digit Growth as It Continues to Take Share From Smaller Rivals. See Updated Analyst Note from 13 Feb 2019
CBRE achieved impressive adjusted EPS growth of 20% and revenue growth of 15% as it concludes an outstanding 2018. Despite the turmoil and negative sentiment that prevailed the toward the end of the year, the company’s fourth-quarter results showed an acceleration in economic activity. Fourth-quarter adjusted EPS increased 26% from a year earlier and fee revenue was up 16%. These results were underpinned by particular strength in occupier outsourcing and leasing, which grew 19% and 24%, respectively. Our fair value estimate for wide-moat CBRE increases to $49 per share, mainly due to the time value of money.Much like its main rival Jones Lang LaSalle, CBRE has been buoyed by several tailwinds that have allowed the company to achieve growth at a breakneck pace in recent years. One such dynamic has been the ability of larger brokers to take share from smaller competitors, which has allowed CBRE to consistently grow faster than the markets it competes in. Despite this development, management commented that it does not hold more than a 10% share in any market it competes in globally, suggesting that there remains an avenue for additional growth in the coming years. The advent of coworking arrangements has likewise served as a tailwind, with management estimating that it added around 3% to U.S. growth figures. As this phenomenon begins to attract a more institutional base, CBRE and its larger peers stand to benefit.
To this end, the company is in the process of launching Hana, which is geared toward coworking solutions for a slightly larger and more institutional client base as compared with shared workspace provider WeWork. CBRE also announced the launch of Host, which is its attempt to provide a platform that offers a streamlined and engaging employee workplace experience. We like these moves, as they allow CBRE to capitalize on emerging trends within the commercial real estate industry.
CBRE Group is a holding company. Through its subsidiaries, the company is a commercial real estate services and investment firm. The company's segments include: Advisory Services, which provides a range of services globally, including property leasing and capital markets; Global Workplace Solutions, which provides a suite of integrated, contractually-based outsourcing services globally for occupiers of real estate; and Real Estate Investments, which is comprised of investment management services provided globally, development services in the United States and United Kingdom and a service designed to help property occupiers and owners meet the demand for flexible office space solutions on a global basis.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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