A report on CBRE Group (CBRE, Financial) touted the company’s improved business mix. Over the past few years, CBRE’s maintenance outsourcing segment has grown rapidly compared to its more cyclical brokerage segment—historically the larger part of the business. Importantly, the market tends to value recurring income, like that from service businesses, at a much higher P/E than businesses based on one-time transactions. Nevertheless, this still concluded that CBRE is fairly priced because its current P/E is approximately at its 15-year average.
From Bill Nygren (Trades, Portfolio)'s fourth-quarter 2019 market commentary.
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