CBRE 97.23 (+1.44%)
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Last update on 2024-06-05

CBRE Group (CBRE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Discover CBRE Group's (CBRE) financial performance in 2023 with a Piotroski F-Score of 5/9. Learn about profitability, liquidity, and operational efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running CBRE Group (CBRE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
0
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

Based on the Piotroski F-Score analysis for CBRE Group (CBRE), the company achieved a score of 5 out of 9. Here's how they fared on each of the criteria: 1. **Profitability**: The net income for 2023 is positive ($986 million), earning 1 point. CFO is also positive ($480 million), earning 1 point. However, Return on Assets (ROA) has decreased, scoring 0 points. Operating cash flow is lower than net income, scoring 0 points. 2. **Liquidity**: The leverage ratio has increased, scoring 0 points. The current ratio has improved, scoring 1 point. Shares outstanding have decreased, earning 1 point. 3. **Efficiency**: Gross margin has decreased, scoring 0 points. Asset turnover has improved, earning 1 point.

Insights for Value Investors Seeking Stable Income

CBRE Group shows a mixed financial performance with a Piotroski score right in the middle at 5. While it demonstrates profitability with positive net income and cash flow from operations, its declining ROA, increased leverage, and reducing gross margin are areas of concern. Improvements in current ratio and asset turnover are positive signs. This analysis suggests CBRE Group has potential but also warnings to be cautious. Investors interested in CBRE should possibly investigate further, particularly around its cash flow management, leverage changes, and operational efficiency before making any decisions. It might not be a clear-cut strong buy but could offer value with detailed due diligence.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of CBRE Group (CBRE)

Company has a positive net income?

Examine the net income value for CBRE Group in 2023 and assess whether it is positive or negative. Positive net income is a fundamental indicator of profitability.

Historical Net Income of CBRE Group (CBRE)

The net income for CBRE Group in 2023 is $986,000,000, which is positive. CBRE has demonstrated a capability to achieve profitability, which is a corner-stone of financial health. Positive net income results in 1 point being added according to the Piotroski score guidelines. Over the last 20 years, CBRE's net income trajectory shows occasional volatility but has overall been on a sustainable upward path since 2008. For example, in 2008, CBRE posted a significant loss of -$1,012,066,000, but turned profitable again in 2009 with $33,341,000 and significantly increased profit in 2021 to $1,837,000,000. The downward shift to $986,000,000 in 2023 from the peak isn’t ideal, but the sustained profitability is an affirming financial health indicator. Trend analysis suggests resilience and growth potential.

Company has a positive cash flow?

CFO, or Cash Flow from Operations, refers to the cash generated by a company’s regular business operations. It is an essential indicator of the company’s financial health and operational efficiency.

Historical Operating Cash Flow of CBRE Group (CBRE)

For the CBRE Group (CBRE) in 2023, the Cash Flow from Operations stands at 480 million USD, which is positive. Over the last 20 years, the trend in operating cash flow has generally been upward, indicating robust operational performance. However, 2023 has seen a decline from the previous years, particularly from the peak of 2.36 billion USD in 2021. Despite this recent dip, the positivity in CFO still earns 1 point according to the criterion. It is crucial for investors to keep an eye on this metric as it can provide insights into the company’s capacity to generate cash and sustain its operations without relying heavily on external financing or debt.

Return on Assets (ROA) are growing?

This criterion evaluates whether the company's Return on Assets (ROA) improved compared to the previous year. An increasing ROA typically indicates better management efficiency and profitability.

Historical change in Return on Assets (ROA) of CBRE Group (CBRE)

In 2022, CBRE Group reported a ROA of 0.0661, which decreased to 0.0458 in 2023. This decline means the company's efficiency in generating profits from its assets has decreased. This trend is unfavorable and points to potentially declining profitability or higher asset utilization without a proportionate increase in profits. Thus, CBRE Group scores 0 points for this criterion. This drop also marks a significant deviation from the 20-year historical industry median, which shows more favorable ROA percentages consistently above 0.3.

Operating Cashflow are higher than Netincome?

The Operating Cash Flow (OCF) should ideally be higher than Net Income to show quality earnings since it accounts for actual cash generated.

Historical accruals of CBRE Group (CBRE)

For CBRE Group in 2023, the Operating Cash Flow was $480 million, while the Net Income reached $986 million. This indicates that OCF is lower than Net Income, which results in a zero score for this criterion according to Piotroski analysis. This discrepancy can raise questions about the quality of earnings. Over the last 20 years, OCF has shown significant fluctuations. For instance, it peaked at approximately $2.36 billion in 2021 and saw a dramatic low of around -$130 million in 2008 during the financial crisis. Inconsistent OCF can signal issues in managing cash flow, whereas stable and higher OCF relative to Net Income suggests more reliable earnings and operational efficiency. The fact that accruals have been persistently positive over these years corroborates the lower OCF, signaling higher non-cash earnings components. Thus, CBRE must address cash flow volatility to enhance financial reliability.

Liquidity of CBRE Group (CBRE)

Leverage is declining?

Change in leverage involves comparing the company's current Leverage Ratio to its Leverage Ratio in the previous year.

Historical leverage of CBRE Group (CBRE)

The leverage for CBRE Group (CBRE) has increased from 0.1056 in 2022 to 0.1727 in 2023. This change reflects a higher reliance on debt in the company's capital structure. Over the past 20 years, CBRE's leverage has shown a decreasing trend since its peak at 0.4839 in 2008, but the recent increase is a concern. Higher leverage can increase financial risk, particularly if earnings decline or interest rates rise, as it means the company has more debt to service. This increase results in zero points for this criterion.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. A ratio above 1 indicates good short-term financial health.

Historical Current Ratio of CBRE Group (CBRE)

For CBRE Group (CBRE), the Current Ratio increased from 1.0348 in 2022 to 1.1726 in 2023. This upward trend signifies a marginal but positive improvement in liquidity. An increase in the Current Ratio over the year suggests better short-term financial health, adding one point in this Piotroski criterion. The historical data shows variability around the 1.00 mark, with a notable dip in 2007 (0.9722) and a peak in 2009 (1.3914). Compared to the industry median for 2023 (1.6881), CBRE is trailing, implying that while there is an improvement within the company, it still lags behind industry standards.

Number of shares not diluted?

Change in Shares Outstanding measures the difference in the number of shares the company has issued from one period to another. A decrease might indicate share buybacks, which can be a positive sign for shareholders.

Historical outstanding shares of CBRE Group (CBRE)

The Outstanding Shares of CBRE Group have decreased from 322,813,345 in 2022 to 308,430,080 in 2023. This decrease results in the addition of 1 point in the Piotroski Analysis, as share buybacks are generally considered favorable since they can increase the value of remaining shares by reducing supply. Over the last 20 years, we see fluctuations with notable periods of small increases and decreases, and the trend from 2022 to 2023 aligns with a historical pattern of active share management by CBRE Group.

Operating of CBRE Group (CBRE)

Cross Margin is growing?

Gross Margin is a critical metric to evaluate a company's operational efficiency and profitability. An increase denotes improved cost control.

Historical gross margin of CBRE Group (CBRE)

Comparing CBRE Group’s Gross Margin from 2022 (0.2137) to 2023 (0.1964), we observe a decrease, setting the point to 0. Historically, its margin has significantly contracted from the peak of 0.5114 in 2003. Additionally, CBRE consistently underperforms the industry median, which stood at 0.4039 for 2023. Thus, the declining Gross Margin and underperformance relative to the industry reflect challenges in operational efficiency and competitive positioning.

Asset Turnover Ratio is growing?

Change in Asset Turnover assesses how effectively a company uses its assets to generate revenue, comparing performance between periods.

Historical asset turnover ratio of CBRE Group (CBRE)

CBRE Group's Asset Turnover has shown an improvement, increasing from 1.4478 in 2022 to 1.4839 in 2023. This upward trend signifies that the company is becoming more efficient in utilizing its assets to generate sales. Over an extended horizon, comparing the Asset Turnover since 2003 shows a long-term growth, hitting its peak in 2018 at 1.7113. Most recent data highlights that their efficiency metrics continue to improve, which is indicative of sound operational management. Therefore, this trend is favorable and scores 1 point.


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