Here's How to Play Newmark Group Stock After 10% Fall in a Month

Newmark Group, Inc. NMRK has seen its stock decline 10.1% over the past month, closing at $12.58 on Thursday. This performance lags behind both the Zacks Real Estate – Operations industry as well as the S&P 500 composite.Macroeconomic uncertainty, tariff woes and expectations of a prolonged high-interest rate environment have been affecting the overall market in recent times. Commercial real estate transactions, too, remain shrouded with elevated interest rates and economic uncertainty. Investors have thus adopted a cautious approach, delaying the closing timeline for transactions. The current landscape has not spared NMRK either and has led to the stock’s recent underperformance. Despite the challenges in the commercial real estate sector, the company's performance in recent years reflects its strategic strengths. However, before hastily deciding to remove this stock from your portfolio or rushing to buy after the dip, it’s important to evaluate whether NMRK has strong growth potential and assess whether the current concerns could significantly impact its performance.One-Month NMRK Stock Price PerformanceImage Source: Zacks Investment ResearchWhat Can Drive Newmark Stock Up?Strong Capital Markets Performance and Market Share Gains: Newmark is enjoying strong capital markets performance and market share gains. Capital markets’ revenues in fourth-quarter 2024 increased by 20.0%, extending a streak of five consecutive quarters of double-digit growth. Excluding the fourth quarter-2023 Signature transactions, Newmark surpassed industry performance, achieving a roughly 113% increase in total Capital Markets notional volumes last quarter. This growth encompassed a 209% rise in Mortgage Brokerage and Debt Placement, an 85% increase in GSE/FHA origination, and a 71% boost in Investment Sales. Driven by its strength in data centers amid the rising demand from hyperscale AI users, the company achieved a record $9.2 billion in industrial volumes across Leasing and Capital Markets.Newmark has a proven record of gaining share in U.S. capital markets. Between 2015 and 2024, its share of U.S. investment sales increased from 3.3% to 8.7% of total industry volumes. Over the same period, its total debt market share grew from 1.5% to 8.9% of total U.S. industry originations.With $2.1 trillion in U.S. commercial and multifamily mortgage maturities expected by 2027, 25% being potentially troubled according to Newmark Research, the company is well-positioned to benefit from increased transaction activity. Apart from driving its capital markets business, this volume of maturities is also expected to drive demand for Newmark’s other services, including leasing, property management, valuation & advisory, and servicing.Resilient Management and Servicing Revenue Growth: Newmark’s management services and servicing business provide a stable base for revenues and earnings. The company has achieved solid growth in management and servicing revenues and aims to grow total revenues for these service lines to more than $2 billion within 5 years. From 2017 to 2024, fees from these businesses surged by 219%, while total revenues grew by 190%, establishing these as Newmark’s fastest-growing service lines since its IPO.Strong Financial Position and Cash Flow Generation: Newmark enjoys a strong financial position and is well-poised for growth with solid cash flow generation capabilities. Its capital-light business model (it does not own real estate), low leverage (net leverage ratio of 1.1 as of Dec. 31, 2024) and solid interest coverage ratio (7.9) enable continued investment in growth initiatives while maintaining financial stability. It also enjoys strong cash flow, generating $437.6 million in operating cash flow in 2024. With no near-term debt maturities, leverage well below its long-term target of ≤1.5X, and two-thirds of expenses being variable, Newmark is well-positioned to navigate potential market disruptions.International Expansion Presents Long-Term Growth Potential: Newmark's recent expansion in Europe — with the launch of capital markets and leasing operations in Germany in the fourth quarter of 2024 and the addition of top talent in France, the U.K., and other global markets — positions the company to capitalize on growth opportunities.Newmark’s non-U.S. revenues have grown from 0.9% of total revenues in 2017 to 13.3% in 2024, reflecting around 59% revenue CAGR. Moreover, with only 13.3% of revenues coming from international markets for Newmark, compared to 28-46% for its full-service U.S.-listed public peers, this real estate operations company has ample room for further growth.Estimate Revision Favoring the StockSimilarly, analysts seem to be bullish about Newmark Group’s prospects, as indicated by the Zacks Consensus Estimate for EPS’s upward revision for both 2025 and 2026 over the past two months. These estimates indicate year-over-year growth rates of 17.9% and 14.8% for 2025 and 2026, respectively.Image Source: Zacks Investment ResearchFind the latest EPS estimates and surprises on Zacks Earnings Calendar.From a valuation perspective, Newmark Group shares present an attractive opportunity. NMRK is considered undervalued, implying that the market is yet to fully recognize or price the company’s potential growth prospects or earnings potential.Currently, NMRK is trading at a forward 12-month price-to-earnings of 8.40X, which is at a discount to the industry average of 15.47X and lower than its one-year median of 9.62X.  Price-to-earnings is a commonly used multiple for valuing real estate operations stocks. The stock is also trading at a discount to its industry peer CBRE Group, Inc.’s CBRE current forward 12-month P/E of 20.75X and Jones Lang LaSalle Incorporated’s JLL P/E of 14.61X.Forward 12 Month Price-to-Earnings (P/E) RatioImage Source: Zacks Investment ResearchFinal Thoughts on NMRKNewmark Group has demonstrated strong operational momentum, driven by market share expansion, strategic investments, and a resilient business model. Despite macroeconomic uncertainties, Newmark’s robust capital markets platform, servicing business and strong cash generation position it well for future growth. Similar positive sentiments of analysts are also echoed in the upward estimate revision trends, and the valuation also looks cheap. All these indicate that assuming an increasing position in this Zacks Rank #1 (Strong Buy) stock will be a prudent decision before the price moves significantly away from its current level. You can see the complete list of today’s Zacks #1 Rank stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Newmark Group, Inc. (NMRK): Free Stock Analysis Report Jones Lang LaSalle Incorporated (JLL): Free Stock Analysis Report CBRE Group, Inc. (CBRE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks