Shares of real estate services company Colliers International Group Inc. (CIGI, Financial) spiked 12% on Tuesday following the announcement of its third-quarter results, which topped analysts' expectations.
The Toronto-based company's stock is still down more than 8% this year despite the rally. It compares to the current year-to-date S&P 500 gain of about 5.3%. This suggests there is still room to run for Colliers. However, when you look at the Peter Lynch earnings line compared to the current share price, the stock appears to be overvalued.
Highlights from the recent quarterly results
Colliers posted adjusted earnings of $1.08 per share on $692.3 million in revenue. Analysts were expecting a bottom line of 79 cents per share on $616.6 million in sales.
These results represent and earnings growth of 3.85% from last year's $1.04 per share and a revenue decline of 6.05% from $736.88 million a year ago.
For the nine-month period, Colliers is tracking for top and bottom line declines of 12% and 11%.
The company's revenue for the first three quarters of the year stands at $1.87 billion, compared to $2.12 billion in the prior-year period. Earnings per share of $2.35 are down 11% from $2.37. Colliers noted a negative impact of 3 cents from foreign exchange on earnings per share.
Despite the reported nine-month decline in earnings and revenue, Colliers remains upbeat going into the final quarter of the year. The company attributed its strong performance for the quarter to its well-diversified portfolio.
"The results are a testament to the resilience of our global platform and differentiated business model that is diversified by geography, service and asset class," Global Chairman and CEO Jay S. Hennick said.
Hennick also noted that the company expects the full-year results to be stronger than previously guided.
Valuation
From a valuation perspective, Colliers International appears to be competitively priced compared to its peers. The stock currently trades with a trailing 12-month price-earings ratio of 36.72, which is significantly lower than Altus Group Ltd.'s (TSX:AIF, Financial) multiple of 126.5 and FirstService Corp.'s (TSX:FSV, Financial) valuation of 120.87.
Colliers' forward price-earnings ratio, which factors in projected earnings for the next 12 months, of 12.79 is also better than Altus Group's 30.21 and FirstService's equivalent of 47.37.
In summary, shares of Colliers International appear to be trading at more attractive valuation multiples compared to its peers. However, the Peter Lynch earnings line suggests that the stock could still be overvalued.
Disclosure: No positions in the stocks mentioned.
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