Analyst Note| Michael Wong, CFA, CPA |
Narrow-moat Cushman & Wakefield posted a solid set of numbers in the second quarter, comfortably beating the FactSet consensus estimate of $0.22 per share with a reported adjusted EPS of $0.50. Fee revenue has fully recovered to beyond prepandemic levels, as the company reported second-quarter fee revenue of $1.6 billion, a 34% increase year over year and a 3% increase from the second quarter of 2019. Adjusted EBITDA also came in strong for the current quarter at $220 million, 26% higher than the second quarter of 2019. Adjusted EBITDA margin calculated on a fee-revenue basis was 13.5%, significantly higher than the 10.2% reported in 2020 and 11.1% in 2019. The adjusted EBITDA growth and margin expansion reflect the impact of strong brokerage activity and permanent cost reduction actions, which management believes amounted to around $30 million in the current quarter and will reach $125 million in annualized permanent cost savings. We do not plan to materially change our $22 fair value estimate for the company as we fully incorporate second-quarter results.