Should Investors Reconsider CBRE After Major Property Acquisitions and a 25% Rally in 2025?

• Thinking about whether CBRE Group offers real value right now? You are not alone, as more investors are questioning if the impressive run can last or if the stock has become too expensive.
• CBRE Group has shown strong performance lately, climbing 6.9% in just the past week, up 24.9% year-to-date, and delivering a massive 162.3% over the last 5 years.
• Market enthusiasm for CBRE Group has been fueled by a string of headline deals and sector momentum, including increased activity in commercial real estate and major property acquisitions making headlines this quarter. All this buzz is driving up expectations, but also spotlighting potential risks as competition grows more intense.
• If you check the numbers, CBRE Group scores just 0 out of 6 on our valuation checklist. This suggests the market may be overlooking some big questions. In the next sections, we will break down how these valuations are typically calculated. Stay tuned because we will reveal a more comprehensive way to judge value at the end.

CBRE Group scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: CBRE Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model helps estimate the true worth of a company by projecting its future cash flows and discounting them to today's dollars. This approach gives investors a sense of the business's core earning power, without getting distracted by market hype or temporary swings.

For CBRE Group, the latest reported Free Cash Flow stands at $1.33 billion. Analyst estimates project strong cash flow growth, with forecasts suggesting Free Cash Flow could reach as high as $2.61 billion by the end of 2029. While analysts provide reliable figures for the next four to five years, additional projections beyond that are carefully extrapolated using reasonable growth rates based on industry trends.

When this sequence of projected cash flows is added up and measured against the current market price, our DCF model estimates CBRE Group's intrinsic value at $144.87 per share. However, the market currently prices the stock about 12.0% above this fair value. This gap indicates that CBRE Group is trading at a premium and may currently be overvalued relative to its future cash-generating capabilities.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CBRE Group may be overvalued by 12.0%. Discover 926 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for CBRE Group.

Approach 2: CBRE Group Price vs Earnings

The Price-to-Earnings (PE) ratio is widely considered the go-to valuation tool for profitable companies like CBRE Group, as it reflects how much investors are willing to pay for each dollar of current earnings. A higher PE often signals strong growth expectations, while risks or cyclical headwinds can compress the ratio. What counts as a "fair" PE can shift depending on factors like company growth, stability, and broader market sentiment.

CBRE Group currently trades at a PE ratio of 38.7x. This stands well above the real estate industry average of 30.3x and the average for its closest peers at 28.3x. On the surface, this suggests that the stock is valued at a premium compared to the wider sector and similar companies.

However, Simply Wall St's "Fair Ratio" goes a step further by accounting for expected earnings growth, business risks, profit margins, the company’s industry, and its size. For CBRE Group, our proprietary Fair Ratio calculation lands at 27.0x. This is more nuanced than a simple comparison with peers or an industry group, since it considers CBRE’s unique financials, recent performance, and risk profile.

Comparing CBRE Group's actual PE of 38.7x against the Fair Ratio of 27.0x, the stock appears to be significantly overvalued based on its earnings profile and risk-adjusted growth outlook.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your CBRE Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is an easy, story-driven tool that lets you map your view of CBRE Group’s future by linking your perspective about its business outlook, risks, and opportunities directly to the numbers: your assumptions for fair value, revenue, earnings, and margins.

With Narratives, you connect the dots between the story you believe in and a financial forecast, then see what fair value makes sense based on your expectations. Available on Simply Wall St’s Community page, Narratives make it simple for anyone, from beginners to seasoned investors, to shape and share their own valuation, compare it with others, and adjust as new news or earnings updates come in.

This means you can quickly see how your fair value assessment (based on your Narrative) compares to today’s price. Your Narrative updates automatically with each new development. For example, some investors on the platform believe CBRE Group can reach $197.0 per share if commercial real estate recovers and margins expand, while others see fair value closer to $115.0 due to persistent market headwinds and stiffer competition.

Do you think there's more to the story for CBRE Group? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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