Cushman & Wakefield (NYSE: CWK) is one of the largest global real estate service firms in the world, offering various brokerage and data services for the commercial real estate (CRE) market. This means its growth and performance directly ties in to the state of the CRE industry, which is experiencing tremendous pressure and unparalleled shifts in supply and demand right now. But rocky times aren't always indicative of a rocky future. Let's take a closer look at where the company stands today and where this real estate stock could be in five years.
Where Cushman & Wakefield is today
Cushman & Wakefield earns income from fees relating to the leasing, sale, project management, or valuation, among other services, of commercial real estate. Right now, the company has roughly 50,000 employees across 60 countries and earned $7.8 billion in revenue in 2020.
Despite fee revenues being slightly higher than anticipated, given the current state of the economy and commercial markets, profits and performance are down significantly. Adjusted EBITDA is down 31%, and fee revenue is down 14% for the full 2020 fiscal year. Leasing, capital markets, and valuation and other service-related fees all decreased. Project management managed to skate by with a 1% increase in revenues for the full year.
As of December 2020, the company had $2.1 billion in cash and cash equivalents, including a revolving line of credit, which is currently unused. However, Cushman & Wakefield's latest fourth-quarter and year-end financial results didn't discuss pending debt maturities, making it hard to discern how long the $2.1 billion can actually take them. The company has employed several cost-saving measures, including reducing bonuses and pay incentives for non-fee earners, which helped lower cost of services and operating expenses around $300 million in 2020.
Prior to the global pandemic, the company's share value held strong. However, prices plummeted in the March 2020 crash and have not been able to regain standing, providing investors an overall -6.57% return on their investment over the past five years. Since the company doesn't currently offer dividends, investors are really looking to this stock for its growth potential.