CBRE currently trades at $118.95 per share and has shown little upside over the past six months, posting a small loss of 4.4%.

Is there a buying opportunity in CBRE, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free .

We're sitting this one out for now. Here are three reasons why you should be careful with CBRE and a stock we'd rather own.

Why Do We Think CBRE Will Underperform?

Established in 1906, CBRE (NYSE:CBRE) is one of the largest commercial real estate services firms in the world.

1. Long-Term Revenue Growth Disappoints

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. Unfortunately, CBRE’s 8.4% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer discretionary sector.

2. Weak Operating Margin Could Cause Trouble

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 generally stayed the same, averaging 3.7% over the last two years. This profitability was lousy for a consumer discretionary business and caused by its suboptimal cost structure.

3. Mediocre Free Cash Flow Margin Limits Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

CBRE has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.3%, lousy for a consumer discretionary business.

Final Judgment

We see the value of companies helping consumers, but in the case of CBRE, we’re out. That said, the stock currently trades at 19.8× forward price-to-earnings (or $118.95 per share). This valuation tells us a lot of optimism is priced in - we think there are better stocks to buy right now. We’d suggest looking at a top digital advertising platform riding the creator economy .

Stocks We Would Buy Instead of CBRE

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.