CBRE Group Inc Class A (CBRE)

Conclusion

CBRE Group is a commercial real estate services company, with advisory, building operations, project management and real estate investment businesses. At a price of 138.17 USD on 9 November 2026, its market capitalisation is 39.82 billion USD.

The verdict is overvalued. The price-to-earnings ratio stands at 28.8x against a ten-year median of 22.1x, a premium of 30.3%, and the price-to-free-cash-flow ratio at 42.5x against 20.5x, a premium of 106.8%. The fair value band runs from 68.85 to 103.27 USD with a midpoint of 86.06 USD, giving a margin of safety of -37.7% at the current price. The discounted cash flow gives 59.35 USD per share, while the fair value from historical multiples is 112.77 USD. The reverse DCF implies growth of 22.3% a year, against revenue growth of 11.2% over five years and free cash flow per share growth of -4.1%.

The case rests on the balance sheet and cash generation: interest coverage of 10.3, an Altman Z-score of 3.27, and free cash flow conversion of 103.9% over five years. Earnings have beaten estimates in all eight recent quarters. The weak points are the operating margin of 3.7% against a median of 4.8%, a return on invested capital of 9.9% barely above a WACC of 9.6%, and free cash flow per share falling over five years. Net debt to EBITDA of 2.93 adds to the pressure.

Financial health

Financial strength is green, held up by interest coverage of 10.3 and an Altman Z-score of 3.27, and held back only by neutral readings on net debt to EBITDA of 2.93 and a current ratio of 1.17. The quick ratio is 1.00 and debt to equity is 1.21. The Altman model was designed for manufacturers, so its zone of safe is an indication only for a services business like CBRE. Insolvency risk: low, about 1.1% by the estimate of the Ohlson model over one to two years. The company does not report a debt maturity schedule, so refinancing risk cannot be checked here.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 103.9% over five years, a Beneish M-score of -2.13 that reads as unlikely to be manipulation, and negative accruals of -1.5%. Stock-based compensation is 0.3% of revenue, and free cash flow after it is 809 million USD on a trailing basis. The trailing conversion is lower, at 67.9%. The share count has fallen at a compound rate of 2.3% over five years, which points to buybacks. The Piotroski score is 5 out of 9. Earnings beat estimates in all 8 recent quarters, by an average of 11.5%. Estimates for the current year rose 0.7% over 90 days, while those for next year fell 2.3%, with 9 downward revisions in the last 30 days against 1 upward.

Profitability

Profitability is red. The operating margin of 3.7% is below its ten-year median of 4.8%, and the gross margin of 17.5% is below its median of 21.6%. The net margin of 3.1% compares with a median of 3.5%. Return on invested capital is 9.9% against a WACC of 9.6%, leaving a ROIC minus WACC of 0.3%, which is neutral. Return on equity of 15.9% is flattered by leverage: the DuPont split shows a net margin of 2.9%, an asset turnover of 1.31 and an equity multiplier of 3.48, with the last two from 2025 year-end figures. The margin stability reading is 0.19.

Growth

Growth is green. Revenue has compounded at 9.6% over three years, 11.2% over five and 14.1% over ten, and it grew in 9 of the last 10 years. Earnings per share compounded at 9.0% over ten years and 11.6% over five, but fell at 3.6% over three. Free cash flow per share fell at 3.7% over three years and 4.1% over five, growing only over ten years at 6.6%. Consensus expects next-year earnings growth of 13.1%, but the reverse DCF shows the price needs 22.3% a year, roughly twice the five-year revenue record, which the company has not delivered recently.

Valuation

Valuation is red, with the verdict overvalued and a margin of safety of -37.7%. The P/E of 28.8x is 30.3% above its ten-year median of 22.1x, the EV/EBITDA of 16.2x is 4.0% above its median of 15.6x, and the price-to-book of 4.6x is 22.5% above its median of 3.7x. The P/S of 0.89x is close to its median. The DCF gives 59.35 USD per share at a discount rate of 11.0%, with about 51% of its value in the terminal value. The fair value band runs from 68.85 to 103.27 USD, and the fair value from historical multiples is 112.77 USD. The fair value is an order-of-magnitude estimate built on fixed assumptions, not a price target. The company pays no dividend, and the free cash flow yield is 2.4%.

Risks

The main risk is that the price keeps assuming growth the business has not delivered: if free cash flow per share keeps falling, the gap to the fair value band widens. Thin margins leave little room for error; a further fall in the operating margin from 3.7% would push ROIC below the 9.6% WACC. Net debt to EBITDA of 2.93 would become harder to carry in a downturn, and the current ratio of 1.17 offers limited cushion. Free cash flow conversion of 67.9% on a trailing basis, against 103.9% over five years, shows how much cash generation depends on timing. Downward estimate revisions for next year point to pressure on earnings expectations. This analysis has no debt maturity schedule and no revenue by segment, so the exposure of each business line and the refinancing profile cannot be assessed.