CBRE Group, Inc.CBRENYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $520.29 per share(market-calibrated)

+264.8%

Upside to Fair Value

Current

$142.63

Pure Model

$538.51

Fair Value

$520.29

Bull Case

$718.47

Bear Case

$387.24

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $538.51.

What's Driving This Ratingfor CBRE

✓

CapEx already efficient

CapEx at 0.71% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 4.49% — below the sector mature average of 30.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $16.3B (21.64% margin).

↑

Strong near-term revenue growth

Analyst consensus projects 12.62% revenue growth in Year 1, fading to 6.90% by Year 5 and 2.50% by Year 10. Revenue reaches $75.4B by Year 10 (vs $40.5B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $423.03/share (16.7x terminal FCF) while exit multiple gives $654.00/share (28.1x terminal FCF). The 22x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.50% growth is more conservative. The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 78.22% indicates efficient cash generation. FCF reaches $13.8B by Year 10 (18.27% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.31

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.41%

Cost of Debt

Pre-tax Cost of Debt1.41%

Tax Rate19.89%

After-tax Cost of Debt1.13%

Equity Weight (E/V)80.98%

Debt Weight (D/V)19.02%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (80.98% × 10.41%) + (19.02% × 1.13%)

= 8.65%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$45.7B	$51.3B	$61.3B	$68.3B	$75.4B
EBIT	$2.1B	$2.3B	$2.8B	$9.3B	$16.3B
Tax	$408M	$459M	$548M	$1.9B	$3.2B
NOPAT	$1.6B	$1.8B	$2.2B	$7.5B	$13.1B
+ Depreciation	$782M	$880M	$1.0B	$1.2B	$1.3B
- Capex	$326M	$367M	$438M	$488M	$539M
- Δ NWC	$143M	$44M	$110M	$93M	$51M
Free Cash Flow	$2.0B	$2.3B	$2.7B	$8.1B	$13.8B
Discount Factor	0.920	0.780	0.661	0.560	0.436
Present Value	$1.8B	$1.8B	$1.8B	$4.5B	$6.0B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$13.8B

Terminal Growth Rate2.50%

WACC8.65%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$229.8B

PV of Terminal Value$100.3B

Exit Multiple Method

Year 10 EBITDA$17.6B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$387.6B

PV of Terminal Value$169.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$34.0B

PV of Terminal Value$100.3B

Enterprise Value$134.3B

(-) Net Debt$8.1B

Equity Value$126.1B

Shares Outstanding298M

Price per Share$423.03

Exit Multiple Method

PV of Projected FCFs$34.0B

PV of Terminal Value$169.1B

Enterprise Value$203.1B

(-) Net Debt$8.1B

Equity Value$195.0B

Shares Outstanding298M

Price per Share$654.00

Pure Model Fair Value

$538.51

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
6.65%	$683.40	$710.46	$744.06	$786.86	$843.26
7.65%	$587.99	$605.14	$625.62	$650.50	$681.39
8.65%	$513.58	$525.11	$538.51	$554.29	$573.14
9.65%	$453.26	$461.35	$470.58	$481.20	$493.54
10.65%	$403.03	$408.90	$415.50	$422.96	$431.47

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$387.24

171.5% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.64

Base Case

$538.51

277.6% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.31

Bull Case

$718.47

403.7% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 1.12

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth12.62%

Year 3 Revenue Growth3.15%

Year 5 Revenue Growth6.90%

Year 7 Revenue Growth5.14%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin4.49%

Terminal EBIT Margin30.00%

Tax Rate19.89%

Historical Capex / Rev0.71%

NWC / Revenue2.79%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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