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DALLAS - CBRE Group, Inc. (NYSE:CBRE), the world's largest commercial real estate services and investment firm, has announced that its Board of Directors has approved a substantial increase in its stock repurchase program. The new authorization allows for the buyback of an additional $5 billion worth of shares, supplementing the existing $4 billion authorization that still has roughly $1.4 billion remaining as of September 30, 2024.
The decision to expand the buyback program is a strategic move by the company's leadership, who believe that the current market valuation of CBRE's shares does not fully reflect the company's long-term growth potential. Emma Giamartino, CBRE's chief financial officer, stated, "The expanded authorization is particularly timely given that we believe our shares' current valuation understates our long-term growth prospects."
CBRE's financial health appears robust, with the company ending the third quarter with more than $4 billion in liquidity, low leverage, and free cash flow projected to surpass $1 billion for the year. The firm's diversified business model is credited for positioning it to continue generating strong earnings and free cash flow growth into the future.
Since 2021, CBRE has repurchased 36 million shares at an aggregate cost of approximately $3 billion, with a weighted average price around $83.50 per share. The share repurchase program is a part of CBRE's capital allocation strategy, which is aimed at maximizing shareholder value.
Headquartered in Dallas, CBRE operates in over 100 countries, employing more than 130,000 people. The company offers a wide range of services to its clients, including facilities and project management, property leasing, and investment management, among others.
This news is based on a press release statement from CBRE and reflects the company's current plans regarding its capital allocation strategy. Share buybacks are commonly used by companies to return value to shareholders and can have the effect of increasing the value of remaining shares. However, the execution of this buyback plan will depend on market conditions and other factors as determined by the company's management.
"In other recent news, CBRE Group Inc (NYSE:CBRE). reported a strong Q3 performance, with a notable increase in core earnings per share (EPS) and revenue across multiple business sectors. The company's core EPS grew by 67% in Q3, marking it as the second-highest in CBRE's history. Additionally, the business revenue showed resilience with an 18% growth, amounting to $3.6 billion. CBRE also witnessed a 19% increase in leasing revenue due to increased office demand. The full-year core EPS outlook has been raised to $4.95-$5.05 from $4.70-$4.90.
In terms of future prospects, CBRE anticipates surpassing prior peak earnings next year, supported by a diversified business model. The company is also exploring significant revenue opportunities in the data center sector, having acquired Direct Line (LON:DLGD) to enhance their Data Center Services business. These are among the recent developments for CBRE Group Inc., as they continue to adapt and grow in response to market conditions."
InvestingPro Insights
CBRE's decision to expand its stock repurchase program aligns with several key financial metrics and trends highlighted by InvestingPro. The company's strong market position is reflected in its status as a prominent player in the Real Estate Management & Development industry, with a substantial market capitalization of $39.62 billion.
The expanded buyback program comes at a time when CBRE is trading near its 52-week high, with the stock price at 95.77% of its peak. This robust performance is underscored by impressive returns, including a 69.17% price total return over the past year and a 45.74% return over the last six months. These figures support management's view that the company has strong growth prospects.
InvestingPro Tips suggest that CBRE is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.63. This indicates that the stock may be undervalued compared to its growth potential, aligning with the company's statement about current valuation understating long-term prospects.
Furthermore, CBRE's financial health appears solid, with InvestingPro data showing that liquid assets exceed short-term obligations and the company operates with a moderate level of debt. This supports the company's assertion of having over $4 billion in liquidity and low leverage.
It's worth noting that CBRE does not pay a dividend to shareholders, making share buybacks a primary method of returning value to investors. The company's ability to generate strong earnings and free cash flow, as mentioned in the article, is reflected in its profitable performance over the last twelve months and analysts' predictions of profitability for the current year.
For investors seeking more comprehensive insights, InvestingPro offers 18 additional tips for CBRE, providing a deeper understanding of the company's financial position and market performance.
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