Company Reports

No-moat-rated Cushman & Wakefield reported a mixed set of numbers in the first quarter as leasing revenue recovered reasonably well, capital markets revenue was in line with our expectations, but services revenue came in lower than expected. The company reported adjusted EPS of $0.00 per share in the first quarter, up from a negative $0.04 per share of adjusted earnings in the first quarter of 2023. The companywide fee revenue was flat in the current quarter on a local-currency basis compared with the previous year, as it was reported at $1.50 billion. Adjusted EBITDA came in at $78 million, 29% higher compared with the first quarter of 2023 on a local-currency basis, driven primarily by higher leasing volume and cost-savings initiatives. This resulted in an adjusted EBITDA margin of 5.2% for the quarter, up 120 basis points compared with the first quarter of last year. We do not intend to change our $17 per share fair value estimate for the firm as we incorporate the first-quarter results.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley, and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals, CBRE and JLL, for lucrative global contracts from multinational clients. The company has benefited from the secular trends in the commercial real estate services industry and has grown strongly through organic growth opportunities, strategic infill acquisitions, and actively recruiting fee-earning teams. M&A is a strategic pillar in its quest to become a single-source provider for the full spectrum of real estate-related services on a global footprint, and the company has a record of successful integrations and broker onboarding.

No-moat-rated Cushman & Wakefield reported a middling set of numbers for the fourth quarter as leasing revenue recovered reasonably well but capital markets revenue remained depressed. Given our macroeconomic outlook and rising interest rates, we think the firm's capital markets business will continue to be pressured in the near term. Management noted that maintained capital markets growth seems unlikely in the first half of the current year.

No-moat-rated Cushman & Wakefield reported lackluster third-quarter results as declines in commercial real estate transaction volume affected its brokerage business while growth in its outsourcing business faltered. We think the brokerage business will remain under pressure in the near term, given our macroeconomic outlook and rising interest rates. The company reported adjusted EPS of $0.21 in the third quarter, down from $0.43 in the year-ago period. Companywide fee revenue was down 11% on a local-currency basis compared with the previous year, reported at $1.59 billion. Adjusted EBITDA came in at $150 million, 27% lower compared with the third quarter of 2022 on a local-currency basis. This resulted in adjusted EBITDA margin of 9.4% for the quarter, down 192 basis points from the third quarter of last year. We are reducing our fair value estimate to $17 per share from $19 after incorporating a slower recovery in the brokerage business in the upcoming years and modeling slightly lower growth for the outsourcing business.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley, and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals, CBRE and JLL, for lucrative global contracts from multinational clients. The company has benefited from the secular trends in the commercial real estate services industry and has grown strongly through organic growth opportunities, strategic infill acquisitions, and actively recruiting fee-earning teams. M&A is a strategic pillar in its quest to become a single-source provider for the full spectrum of real estate-related services on a global footprint, and the company has a record of successful integrations and broker onboarding.

No-moat-rated Cushman & Wakefield’s second-quarter results continue to be affected by declines in commercial real estate transaction volumes. 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 adjusted EPS of $0.22 in the second quarter, down from $0.63 per share of adjusted earnings in the second quarter of 2022. Companywide fee revenue was down 14% in the current quarter on a local-currency basis compared with the previous year as it was reported at $1.63 billion. Adjusted EBITDA came in at $146 million, 44% lower than the second quarter of 2022 on a local-currency basis. This resulted in an adjusted EBITDA margin of 8.9% for the quarter, down 480 basis points compared with the same quarter last year. The operating leverage in the brokerage business is the main reason behind the sharp fall in the company’s overall profitability during the quarter. We are maintaining our $19 fair value estimate for the firm after incorporating second-quarter results.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley, and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals, CBRE and JLL, for lucrative global contracts from multinational clients. The company has benefited from the secular trends in the commercial real estate services industry and has grown strongly through organic growth opportunities, strategic in-fill acquisitions, and actively recruiting fee-earning teams. M&A is a strategic pillar in its quest to become a single source provider for the full spectrum of real estate-related services on a global footprint, and the company has demonstrated a track record of successful integrations and broker onboarding.

No-moat-rated Cushman & Wakefield's first-quarter results were affected by significant declines in global brokerage volumes. As per JLL research, global direct investment sales were down 54% in local currency during the first quarter, with the Americas down 61%, EMEA down 53%, and Asia-Pacific down 28%. Global office leasing volumes were also down approximately 18% in the first quarter compared with the first quarter of 2022. Gross leasing volumes within the industrial sector have also softened in recent months after a very strong couple of years. Overall, we think that the pressure on the brokerage business will intensify further this year given our macroeconomic outlook and rising interest rates.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley, and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals, CBRE and JLL, for lucrative global contracts from multinational clients. The company has benefited from the secular trends in the real estate services industry and has grown strongly through organic growth opportunities, strategic in-fill acquisitions, and actively recruiting fee-earning teams. M&A is a strategic pillar in its quest to become a single source provider for the full spectrum of real estate-related services on a global footprint, and the company has demonstrated a track record of successful integrations and broker onboarding.

No-moat-rated Cushman & Wakefield reported disappointing results in the fourth quarter as rising interest rates weighed on the company's capital markets business. The company reported adjusted EPS of $0.46 per share in the fourth quarter, 51% lower than the $0.94 per share of adjusted earnings in the fourth quarter of 2021. The companywide fee revenue was down 17% in the current quarter compared with the previous year as it was reported at $1.85 billion. Adjusted EBITDA came in at $220 million, 35% lower compared with the same quarter in the previous year on a local currency basis. This resulted in an adjusted EBITDA margin of 11.9% for the quarter, down 380 basis points on a year-over-year basis. We are maintaining our $20 fair value estimate for the firm after incorporating fourth-quarter results.

The commercial real estate, or CRE, service industry has overseen a period of rapid growth since the nadir of the real estate-driven financial crisis of 2007. The industry recovered rapidly since the pandemic with record profitability in 2021 on the back of low interest rates, increased availability of capital, strong real estate valuations, and an upbeat economic environment. However, investors are increasingly worried about the prospects of CRE service firms amid the currently challenging macroeconomic environment with rapidly increasing interest rates and a slowing economy. We think that CRE service firms are in much better shape to weather the upcoming economic downturn with strong balance sheets and an ability to better control their expenses. In addition to this, some of the companies in the sector have materially increased their earnings contributions from business lines like facility management, project management, and loan servicing that are less cyclical than their legacy brokerage business over the past decade.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley, and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals, CBRE and JLL, for lucrative global contracts from multinational clients. The company has benefited from the secular trends in the real estate services industry and has grown strongly through organic growth opportunities, strategic in-fill acquisitions, and actively recruiting fee-earning teams. M&A is a strategic pillar in its quest to become a single source provider for the full spectrum of real estate-related services on a global footprint, and the company has demonstrated a track record of successful integrations and broker onboarding.

No-moat Cushman & Wakefield held up relatively well in the third quarter amid a difficult environment with rising interest rates and a slowing economy. As per JLL research, global direct investment volumes in commercial real estate were down 18% in the third quarter across all regions, with the Americas down 21%, Asia-Pacific down 17%, and EMEA down 13%. Lower transaction volumes had an impact on Cushman & Wakefield’s margins in the current quarter given the operating leverage in the business. We expect investment volumes to remain under significant pressure given high interest rates and relatively lower liquidity in the market. We think that things will get much worse for real estate brokers in the upcoming quarters.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals CBRE and JLL for lucrative global contracts from multinational clients. The company has benefitted from the secular trends in the real estate services industry and has been able to grow strongly through organic growth opportunities, strategic in-fill acquisitions and by actively recruiting fee earning teams. M&A is a strategic pillar for the company in its quest to become a single source provider for the full spectrum of real estate related services on a global footprint and the company has demonstrated a track record of successful integrations and broker onboarding.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals CBRE and JLL for lucrative global contracts from multinational clients. The company has benefitted from the secular trends in the real estate services industry and has been able to grow strongly through organic growth opportunities, strategic in-fill acquisitions and by actively recruiting fee earning teams. M&A is a strategic pillar for the company in its quest to become a single source provider for the full spectrum of real estate related services on a global footprint and the company has demonstrated a track record of successful integrations and broker onboarding.

No-moat Cushman & Wakefield delivered a good set of numbers for the second quarter, but rising interest rates and a slowing economy are major headwinds for the company in the medium term. We expect real estate transactional volume to slow in the upcoming quarters due to a slowing macroeconomic environment, resulting in a material impact on the company’s brokerage business. We think that investment sales and to a lesser degree leasing will come under increasing pressure in the back half of the year against the elevated levels of 2021.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals CBRE and JLL for lucrative global contracts from multinational clients. The company has benefitted from the secular trends in the real estate services industry and has been able to grow strongly through organic growth opportunities, strategic in-fill acquisitions and by actively recruiting fee earning teams. M&A is a strategic pillar for the company in its quest to become a single source provider for the full spectrum of real estate related services on a global footprint and the company has demonstrated a track record of successful integrations and broker onboarding.

No-moat-rated Cushman & Wakefield posted a good set of numbers in the first quarter, comfortably beating the FactSet consensus estimate of $0.23 per share with a reported adjusted EPS of $0.48. Fee revenue came in strong as the company reported first-quarter fee revenue of $1.7 billion, a 27% increase on a year-over-year basis. Fee revenue growth reflects strong brokerage activity in the first quarter with all segments reporting brokerage revenue higher than prepandemic levels. The company reported first-quarter adjusted EBITDA of $214 million, a 115% increase compared with last year. This resulted in adjusted EBITDA margins being reported at 12.6% in the first quarter, up 512 basis points compared with the previous year. The margin expansion over the past year is mainly a result of significant operating leverage in the company’s business model, and it reflects the buoyant transaction activity in the market. We are impressed by the company's ability to deliver in a favorable environment, however, we would like to point out that the increasing interest rate environment can pressure the transactional businesses of the company resulting in lower fee revenue growth and margin compression in the upcoming years. We are maintaining our $25.00 fair value estimate after incorporating the first-quarter results.

Cushman & Wakefield underwent a major business transformation after the combination of DTZ, Cassidy Turley and Cushman & Wakefield in 2015. The combination of these three firms expanded its geographical presence, added incremental capabilities, and gave the company adequate scale to effectively compete with its larger rivals CBRE and JLL for lucrative global contracts from multinational clients. The company has benefitted from the secular trends in the real estate services industry and has been able to grow strongly through organic growth opportunities, strategic in-fill acquisitions and by actively recruiting fee earning teams. M&A is a strategic pillar for the company in its quest to become a single source provider for the full spectrum of real estate related services on a global footprint and the company has demonstrated a track record of successful integrations and broker onboarding.

No-moat rated Cushman & Wakefield ended the year with a strong set of numbers in the fourth quarter as it reported adjusted earnings per share of $0.94, more than double the $0.43 reported in the previous year. Fee revenue for the quarter was at $2.2 billion, a 35% increase on a year-over-year basis and a 17% increase from the fourth quarter of 2019. The strong growth in revenue reflects record-setting volume in capital markets and continued momentum in non-office leasing resulting in brokerage revenue exceeding prepandemic levels.