Asset Structure Analysis

CBRE’ s total assets were $22.55 billion as of December 31, 2023, up from $20.5 billion as of December 31, 2022.

Goodwill was $5.13 billion as of December 31, 2023, accounting for 22.7% of total assets.

Other intangible assets were $2.08 billion as of December 31, 2023, making up 9.2% of total assets.

Total current assets were $9.67 billion as of December 31, 2023,  representing 42.9% of total assets.

Liquidity and Solvency analysis

Total current liabilities were $8.24 billion as of December 31, 2023.

The current ratio was 1.17 as of December 31, 2023.

Total liabilities were $13.5 billion as of December 31, 2023.

The debt ratio was 60% in 2023.

Given the size of goodwill and intangible assets, the debt ratio was undervalued.

Among total liabilities, the combination of long-term debt and non-current operating lease liabilities was $3.9 billion.

Net cash provided by operating activities was $480 million, $1.63 billion and $2.36 billion in 2023, 2022 and 2021, respectively.

Considering the long-term level of cash flow, CBRE could maintain its debt.

Profitability

CBRE’ s revenues were $32 billion, $30.8 billion and $27.75 billion in 2023, 2022 and 2021, respectively.

The cost of revenues was $25.7 billion, $24.2 billion and $21.6 billion in 2023, 2022 and 2021, respectively.

The gross profit margin was 19.6%, 21.4% and 22.2% in 2023, 2022 and 2021, respectively.

Operating profit was $1.1 billion, $1.5 billion and $1.64 billion in 2023, 2022 and 2021, respectively.

Operating profit margin was 3.5%, 4.9% and 7.6% in 2023, 2022 and 2021, respectively.

Net income was $1.03 billion, $1.42 billion and $1.84 billion in 2023, 2022 and 2021, respectively.

Cash Flow Analysis

Net cash provided by operating activities was $480 million, $1.63 billion and $2.36 billion in 2023, 2022 and 2021, respectively.

Capital expenditures were $305 million, $260 million and $210 million in 2023, 2022 and 2021, respectively.

The free cash flow was $175 million, $1.37 billion and $2.15 billion in 2023, 2022 and 2021, respectively.

CBRE returned capital to shareholders through repurchases of stock.

Repurchases of stock were $665 million, $1.85 billion and $369 million in 2023, 2022 and 2021, respectively.

CBRE ‘s operating performance in the six months ended to June 30, 2024

The company’s revenues were $16.33 billion and $15.13 billion in the six months ended to June 30, 2024 and the six months ended to June 30, 2023.

The net income was $290 million and $3.1 million in the six months ended to June 30, 2024 and the six months ended to June 30, 2023.

Net cash provided by operating activities was -$205 million and -$756 million in the six months ended to June 30, 2024 and the six months ended to June 30, 2023.

Conclusion

Although CBRE’s revenues have increased, net profit declined and cash flow showed a sign of deterioration.

CBRE’ s stock price is $121.60 per share, which is equivalent to $37.26 billion of market capitalization.

Based on financial performance, we reckon that CBRE’ s reasonable valuation is $10 billion to 15 billion.

Currently, CBRE’ s stock price is seriously overvalued.

Disclaimer: The content is for reference only and does not constitute investment advice.