Cushman & Wakefield (NYSE:CWK) misses Q2 sales targets by stock

Stock Story –

Real estate services firm Cushman & Wakefield ( NYSE:CWK ) missed analyst expectations in Q2 CY2024, with revenue down 4.9% from a year earlier to $2.29 billion. It posted non-GAAP earnings of $0.20 per share, down from $0.22 per share in the same quarter last year.

Is now the time to buy Cushman & Wakefield? Find out by reading the original article on StockStory, it’s free.

Cushman & Wakefield (CWK) Q2 CY2024 Highlights:

• Income: $2.29 billion vs. analyst estimates of $2.36 billion (2.9% miss)
• Adjusted EBITDA: $138.9 million vs. analyst estimates of $132.1 billion (5.1% beat)
• EPS (non-GAAP): $0.20 vs. analyst estimates of $0.18 (10.8% beat)
• Gross margin (GAAP): 18.1%, up from 17.8% in the same quarter last year
• Free cash flow of $13.8 million is up from -$139.4 million in the previous quarter
• Market Capitalization: 3.10 billion dollars

“Our strong second quarter results, highlighted by our third consecutive quarter of leasing revenue growth and a significant improvement in free cash flow, are a testament to our execution against our strategic priorities,” said Michelle MacKay, Chief Executive Officer of Cushman & Wakefield.

With expertise in the commercial real estate sector, Cushman & Wakefield (NYSE:CWK) is a Chicago-based global real estate firm that provides a comprehensive range of client services.

Real Estate Services Technology has been a double-edged sword in real estate services. On the one hand, Internet listings are effective in disseminating information worldwide, casting a wide net for buyers and sellers to increase the chances of a transaction. On the other hand, digitization in the real estate market could disintermediate key players, such as agents, who use information asymmetries to their advantage.

Sales Growth A company’s long-term performance is an indicator of its overall business quality. While any business can be successful in the short term, the top ones enjoy sustained growth for many years. Unfortunately, Cushman & Wakefield’s sales have grown at a paltry 1.8% compound annual growth rate over the past five years. This shows that it has failed to scale in a major way and is a rough starting point for our analysis.

We at StockStory place the greatest emphasis on long-term growth, but when it comes to consumer discretionary, a broad historical view can miss a company driving a successful new product or emerging trend. Cushman & Wakefield’s history shows it has risen in the past, but has given up gains over the past two years as its revenue has fallen 4.3% annually.

We can better understand the company’s revenue dynamics by analyzing its three most important segments: management, leasing and capital markets, which represent 37.8%, 19.7% and 7.1% of revenues. Over the past two years, Cushman & Wakefield’s Management (property management) revenues have averaged 2.5% year-on-year growth, while Leasing (tenant sourcing) and Capital Markets (financial advisory) revenues ) recorded average decreases of 5.5% and 31.5%.

This quarter, Cushman & Wakefield missed Wall Street estimates and reported a rather uninspiring 4.9% year-over-year revenue decline on revenue of $2.29 billion. Looking ahead, Wall Street expects sales to grow 11.4% over the next 12 months, an acceleration from this quarter.

Cash is King While earnings are undoubtedly valuable for evaluating company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Cushman & Wakefield has shown poor cash profitability over the past two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1.4%, poor for a consumer discretionary business.

Cushman & Wakefield broke even from a free cash flow perspective in Q2. This quarter’s result was good as its margin was 1.7 percentage points higher than the same quarter last year, but we wouldn’t put too much weight in the short term as investment needs can be seasonal, causing fluctuations temporary. Long-term trends outweigh fluctuations.

Key takeaways from Cushman & Wakefield’s Q2 results It was good to see that Cushman & Wakefield beat analysts’ EBITDA and adjusted EPS expectations this quarter. On the other hand, its revenue missed miserably, and leasing revenue fell short of Wall Street estimates. Overall, this was a mixed quarter for Cushman & Wakefield. The stock traded up 2.3% at $13.01 immediately after the report.