Shares of CBRE Group CBRE have rallied 9.6% so far in the quarter, outperforming its industry’s growth of 6.6%.

With a wide array of real estate products and services offerings, CBRE Group enjoys a robust scale and is the largest commercial real estate services and investment firm (based on 2023 revenues).

In November, CBRE Group announced an expanded $5 billion stock repurchase authorization. This is in addition to the present $4 billion stock repurchase authorization that had roughly $1.4 billion remaining as of Sept. 30, 2024. The expanded authorization comes at a crucial time, as the company believes that the current valuation of its shares does not represent its long-term growth potential.

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Factors Behind the Surge in CBRE Stock

In October, CBRE Group reported third-quarter 2024 core earnings per share (EPS) of $1.20, ahead of the Zacks Consensus Estimate of $1.06. The reported figure also increased 66.7% year over year. Results reflected double-digit revenue and segment operating profit growth, with significant operating leverage in Advisory Services, Global Workplace Solutions (“GWS”) and Real Estate Investments business segments. The company also expected a strong fourth quarter across all three segments and increased its 2024 core EPS outlook, fueling investors’ optimism on the CBRE stock.

Over the past few years, CBRE has opted for a better-balanced and more resilient business model. It has shifted toward a more diversified and contractual revenue base, which enables it to tide over market disruptions and other economic uncertainties. Third-quarter 2024 revenues were up 14.8% year over year to $9.04 billion, and this trend is expected to continue.

Moreover, with occupiers of real estate increasingly opting for outsourcing and relying on the expertise of third-party real estate specialists to optimize their operations, CBRE Group’s GWS segment has been benefiting. The GWS segment registered a year-over-year increase of 12.3% (13% in local currency) in revenues to $6.35 billion in the third quarter. With first-generation outsourcing wins and existing contract expansions, this positive momentum is anticipated to continue.

CBRE Group has been focusing on strategic in-fill acquisitions by acquiring regional or specialty firms and independent affiliates as part of its efforts to widen its global reach and expand and reinforce its service offerings. In the first nine months of 2024, CBRE Group completed six in-fill business acquisitions, including two in the Advisory Services segment and four in the GWS segment, with an aggregate purchase price of approximately $295 million in cash and non-cash consideration. Such opportunistic acquisitions and strategic investments are likely to serve as growth drivers, supplementing its organic growth.

CBRE Group is also focused on maintaining a solid balance sheet and ample liquidity. It had $4 billion in total liquidity as of Sept. 30, 2024. The company’s net leverage ratio was 1.26 as of the same date, significantly less than CBRE’s primary debt covenant of 4.25. With ample financial flexibility, CBRE is well-positioned to capitalize on growth opportunities. Its trailing 12-month return on equity is 13.91% compared with the industry’s average of 1.54%. This indicates that the company is more efficient in using shareholders’ funds than its peers.