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TheStreet Open House

Why CBRE Group (CBG) Stock Is Gaining Today

NEW YORK (TheStreet) -- Shares of CBRE Group Inc. (CBG) are up 7.70% to $28.69 on Thursday after the company reported an increase in net income and revenue for the 2014 first quarter.

The property management holding company reported net income for the quarter rose 80% to $67.7 million, or 20 cents per diluted share, compared to $37.5 million, or 11 cents per diluted share, from the same quarter 2013.

CBRE Group's revenue totaled $1.9 billion, a 26% increase from $1.5 billion in the first quarter 2013.

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TheStreet Ratings team rates CBRE GROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CBRE GROUP INC (CBG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 39.8%. Since the same quarter one year prior, revenues rose by 11.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $510.47 million or 24.19% when compared to the same quarter last year. In addition, CBRE GROUP INC has also vastly surpassed the industry average cash flow growth rate of -59.16%.
  • CBRE GROUP INC's earnings per share declined by 34.6% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, CBRE GROUP INC reported lower earnings of $0.94 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.94).
  • Even though the current debt-to-equity ratio is 1.31, it is still below the industry average, suggesting that this level of debt is acceptable within the Real Estate Management & Development industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.95 is weak.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Real Estate Management & Development industry and the overall market, CBRE GROUP INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • You can view the full analysis from the report here: CBG Ratings Report
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