CBRE Group (CBRE): A Fair Valuation Assessment

Is CBRE Group's Market Price Justified by its Intrinsic Value?

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CBRE Group Inc (CBRE, Financial) has experienced a slight daily loss of 1.17%, yet over the past three months, it has seen a commendable gain of 15.5%. With an Earnings Per Share (EPS) of $1.87, investors are keen to determine whether the current stock price reflects the company's fair value. This article delves into the valuation analysis of CBRE Group (CBRE) to address the question: Is the stock Fairly Valued? Keep reading for an in-depth exploration of the company's intrinsic value.

Company Introduction

CBRE Group Inc (CBRE, Financial) is a global leader in real estate services, providing comprehensive solutions to owners, occupants, and investors. The company's diverse operations include leasing, property and project management, and capital markets advisory. With an investment management arm overseeing more than $140 billion in assets, CBRE Group is a significant player in the real estate sector. The stock is currently trading at $90.41 per share, with a market capitalization of $27.60 billion. When juxtaposed with the GF Value of $93.74, a measure of intrinsic value, it begs the question of whether the stock is trading at a fair valuation.


Summarize GF Value

The GF Value is a unique valuation metric that suggests the intrinsic value of a stock. It is derived from a blend of historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance forecasts. According to the GF Value, CBRE Group (CBRE, Financial) is deemed to be fairly valued. The stock's current price aligns closely with the GF Value, indicating that the long-term return of its stock is likely to mirror the rate of its business growth.


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Financial Strength

Assessing a company's financial strength is critical to mitigate the risk of permanent capital loss. CBRE Group's financial strength is fair, with a cash-to-debt ratio of 0.22, placing it in a better position than 53.75% of its industry peers. Its overall financial strength score is 6 out of 10.

Profitability and Growth

Investing in profitable companies, especially those with a track record of consistent profitability, is generally less risky. CBRE Group's strong profitability is evident, with a profitability rank of 8 out of 10 and a decade of profits. In the past year, CBRE Group notched up sales of $31.20 billion and an Earnings Per Share (EPS) of $1.87, although its operating margin is lower than many of its competitors. The company's growth is also notable, with a 3-year average revenue growth rate surpassing 66.15% of the industry.


Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) is another method to evaluate profitability. CBRE Group's ROIC of 4.53 is currently below its WACC of 10.43, suggesting the company may not be creating value for shareholders as efficiently as possible.


Overall, the fair valuation of CBRE Group (CBRE, Financial) stock is backed by a solid financial condition and robust profitability. Its growth outperforms over half of the companies in the Real Estate industry. For a more detailed look at CBRE Group's financials, investors can visit the company's 30-Year Financials here.

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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.


I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.