Searching for a Promising Growth Stock? Here Are 3 Reasons CBRE (CBRE) Stands Out as a Strong Option

Why Growth Investors Should Consider CBRE Group

Investors who prioritize growth typically seek out companies demonstrating superior financial expansion, as these businesses tend to attract market interest and can yield impressive returns. However, identifying truly outstanding growth stocks can be challenging.

This difficulty arises because such stocks often come with increased risk and price fluctuations. Investing in a company whose growth momentum has faded or is about to end can result in substantial losses.

The Zacks Growth Style Score, a component of the Zacks Style Scores framework, goes beyond standard growth metrics to assess a company's genuine potential for expansion, making it easier to pinpoint promising growth opportunities.

CBRE Group (CBRE) currently stands out as a top recommendation from this system. The company not only boasts a strong Growth Score but also holds a high Zacks Rank.

Studies indicate that stocks with robust growth characteristics tend to outperform the broader market. The best results are often seen in companies with a Growth Score of A or B, combined with a Zacks Rank of #1 (Strong Buy) or #2 (Buy).

There are several compelling reasons why this real estate investment management firm is an attractive growth candidate right now. Here are three key factors to consider:

Earnings Expansion

Rising earnings are a primary driver for most investors, and those focused on growth typically look for companies with double-digit profit increases—a sign of strong prospects and potential share price appreciation.

Although CBRE's historical earnings per share (EPS) growth rate is just 1%, the outlook is much brighter. Analysts project the company's EPS will climb by 15.3% this year, outpacing the industry average of 12.6%.

Accelerating Cash Flow

Healthy cash flow is essential for any business, but rapid cash flow growth is particularly advantageous for companies aiming to expand. With more cash on hand, these businesses can pursue new initiatives without relying on costly external financing.

Currently, CBRE's year-over-year cash flow growth stands at 16.7%, significantly higher than many competitors and well above the industry average of 1.4%.

Looking at the longer term, CBRE has achieved an annualized cash flow growth rate of 9.8% over the past three to five years, compared to the industry’s 2.3% average.

Upward Earnings Estimate Revisions

In addition to the metrics above, investors should pay attention to changes in earnings forecasts. A trend of increasing estimates is generally a positive sign, as research shows a strong link between upward revisions and short-term stock price gains.

CBRE has recently seen its current-year earnings estimates revised higher, with the Zacks Consensus Estimate rising by 2.3% in the past month.

Conclusion

Thanks to these positive earnings estimate revisions, CBRE has earned a Zacks Rank #2, along with an A Growth Score based on several factors discussed above.

This combination positions CBRE for potential outperformance, making it a strong consideration for growth-focused investors.