CB Richard Ellis Group Inc. (CBG) reported recurring earnings of 1 penny per share in first quarter 2010, which missed the Zacks Consensus Estimate of 2 cents. Investors were clearly disappointed as shares fell on the news.
Wall Street analysts have now had a couple weeks to digest this information, and they remain unimpressed. Below we will cover the results of the recent earnings announcement, subsequent analyst estimate revisions and Zacks ratings for the short term and long term outlook for the stock.
Earnings Report Review
It’s never a good thing to miss estimates, even if just by a penny. Turning to the revenue picture, it increased 15% year-over-year, primarily due to improved performance across all geographic regions and business lines. During the quarter, global property sales revenue increased 51% year-over-year, while leasing revenue increased 23%, driven by strong performance in the Asia-Pacific region, particularly Australia and New Zealand.
(Read our full coverage on this earnings report: CB Richard Ellis Improves)
Earnings Estimate Revisions – Overview
Estimates have moved slightly in the negative direction for CB Richard since the earnings release, meaning that analysts were somewhat pessimistic about the short-term performance of the company. Let’s dig into the earnings estimate details.
Agreement of Analysts
In the last seven days, both quarterly and fiscal estimates have been lowered by 1 analyst. However, analysts are not agreeing about the future outlook for CB Richard’s earnings, as is visible below. Two analysts have raised their estimates for 2010 and 2 have lowered them. For fiscal 2011, the picture is relatively better, with 4 analysts raising their earnings estimates and only 1 lowering them. This is a positive showing.
Magnitude of Estimate Revisions
Earnings estimates nudged up 2 cents from $0.52 to $0.54 since the earnings announcement. For fiscal 2011, earnings estimates have moved up 5 cents from $0.82 to $0.87. This is encouraging news for the company. The gradual revival of the overall economy has also enabled CB Richard to drive its growth engine, and we remain positive about indications of stabilization and a recovery of market conditions.
The long-term estimate picture for CB Richard is positive. CB Richard is the world’s largest commercial real estate services firm, with leading full-service operations in major metropolitan areas throughout the world. The company operates as a single-source provider of real estate solutions with a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets.
The current market dislocations have also resulted in newer opportunities for CB Richard, such as distressed assets marketing and service of failed commercial mortgage-backed securities loan funds. However, pricing competition, deflationary pressures, and currency headwinds are the potential risks that may weigh on the company’s top and bottom-lines.
Currently, CB Richard shares are maintaining a Zacks #3 Rank, which translates to a short-term Hold recommendation. Our long-term recommendation for the stock also remains middle-of-the-road at Neutral.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at http://www.zacks.com/education/
Read the full analyst report on “CBG”
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