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CBRE Group, Inc. (NYSE:CBRE) received a lot of attention from a substantial price increase on the NYSE over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine CBRE Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for CBRE Group
Is CBRE Group still cheap?
The stock is currently trading at US$50.04 on the share market, which means it is overvalued by 40.81% compared to my intrinsic value of $35.54. This means that the opportunity to buy CBRE Group at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that CBRE Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from CBRE Group?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by a double-digit 16% over the next couple of years, the outlook is positive for CBRE Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? CBRE’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe CBRE should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on CBRE for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for CBRE, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.