Commercial real estate firm CBRE (NYSE: CBRE) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 13.5% year on year to $10.26 billion. Its non-GAAP profit of $1.61 per share was 10.2% above analysts’ consensus estimates.
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CBRE (CBRE) Q3 CY2025 Highlights:
- Revenue: $10.26 billion vs analyst estimates of $10.05 billion (13.5% year-on-year growth, 2.1% beat)
- Adjusted EPS: $1.61 vs analyst estimates of $1.46 (10.2% beat)
- Adjusted EBITDA: $821 million vs analyst estimates of $781.8 million (8% margin, 5% beat)
- Operating Margin: 4.7%, in line with the same quarter last year
- Free Cash Flow Margin: 0%, down from 5.5% in the same quarter last year
- Market Capitalization: $48 billion
Company Overview
Established in 1906, CBRE (NYSE: CBRE) is one of the largest commercial real estate services firms in the world.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, CBRE grew its sales at a 10.3% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. CBRE’s annualized revenue growth of 12.3% over the last two years is above its five-year trend, but we were still disappointed by the results. 
We can dig further into the company’s revenue dynamics by analyzing its most important segment, Advisory Services. Over the last two years, CBRE’s Advisory Services revenue (leasing, capital markets) averaged 10.9% year-on-year growth. 
This quarter, CBRE reported year-on-year revenue growth of 13.5%, and its $10.26 billion of revenue exceeded Wall Street’s estimates by 2.1%.
Looking ahead, sell-side analysts expect revenue to grow 9.4% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
CBRE’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 4.1% over the last two years. This profitability was lousy for a consumer discretionary business and caused by its suboptimal cost structure.
This quarter, CBRE generated an operating margin profit margin of 4.7%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
CBRE’s EPS grew at a solid 13.7% compounded annual growth rate over the last five years, higher than its 10.3% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.
In Q3, CBRE reported adjusted EPS of $1.61, up from $1.20 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects CBRE’s full-year EPS of $5.98 to grow 15.7%.
Key Takeaways from CBRE’s Q3 Results
It was good to see CBRE beat analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 2.5% to $168.01 immediately after reporting.
CBRE had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
