CBRE Earnings: Outsourcing Continues to Grow, but Advisory Sales Business Remains Under Pressure

Narrow-moat-rated CBRE Group reported middling second-quarter results as the outsourcing business remained solid, but the advisory sales business was impacted by lower transaction volume. We think that the brokerage business will continue to remain under pressure in the near term given our macroeconomic outlook and rising interest rates. The company reported core EPS of $0.82 per share in the first quarter, 8% higher than the FactSet consensus estimate of $0.76 per share. The core EPS in the second quarter was approximately 55% lower on a year-over-year basis. CBRE shares were down around 5% after the company released the results. CBRE reduced its earnings guidance for full-year 2023, with core earnings per share expected to decline by 20%-25% compared with the previous guidance of low to mid double digits. The guidance downgrade can mostly be attributed to a higher-than-expected decline in the advisory and real estate investment segments.