Newmark (NMRK)

Real estate services firm Newmark (NASDAQ:NMRK) announced better-than-expected revenue in Q3 CY2025, with sales up 25.9% year on year to $863.5 million. Its non-GAAP profit of $0.42 per share was 3.3% above analysts’ consensus estimates.

Company Overview

Founded in 1929, Newmark (NASDAQ:NMRK) provides commercial real estate services, including leasing advisory, global corporate services, investment sales and capital markets, property and facilities management, valuation and advisory, and consulting.

Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.

Newmark’s primary competitors include CBRE (NYSE:CBRE), Jones Lang LaSalle (NYSE:JLL), Cushman & Wakefield (NYSE:CWK), Colliers International (NASDAQ:CIGI), and Marcus & Millichap (NYSE:MMI).

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. Over the last five years, Newmark grew its sales at a 10.3% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Newmark’s annualized revenue growth of 16.5% over the last two years is above its five-year trend, suggesting some bright spots.

This quarter, Newmark reported robust year-on-year revenue growth of 25.9%, and its $863.5 million of revenue topped Wall Street estimates by 11.8%.

Looking ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

Newmark’s operating margin has risen over the last 12 months and averaged 5.5% over the last two years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports lousy profitability for a consumer discretionary business.

This quarter, Newmark generated an operating margin profit margin of 9.9%, up 3.9 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Newmark’s EPS grew at an unimpressive 5.3% compounded annual growth rate over the last five years, lower than its 10.3% annualized revenue growth. We can see the difference stemmed from higher interest expenses or taxes as the company actually improved its operating margin and repurchased its shares during this time.

In Q3, Newmark reported adjusted EPS of $0.42, up from $0.33 in the same quarter last year. This print beat analysts’ estimates by 3.3%. Over the next 12 months, Wall Street expects Newmark’s full-year EPS of $1.49 to grow 15.5%.

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.

While Newmark posted positive free cash flow this quarter, the broader story hasn’t been so clean. Over the last two years, Newmark’s demanding reinvestments to stay relevant have drained its resources, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 5.2%, meaning it lit $5.16 of cash on fire for every $100 in revenue.

Newmark’s free cash flow clocked in at $106.4 million in Q3, equivalent to a 12.3% margin. Its cash flow turned positive after being negative in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Newmark historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 2.8%, lower than the typical cost of capital (how much it costs to raise money) for consumer discretionary companies.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Newmark’s ROIC has stayed the same over the last few years. If the company wants to become an investable business, it must improve its returns by generating more profitable growth.

Newmark reported $224,100 of cash and $2.10 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $531.3 million of EBITDA over the last 12 months, we view Newmark’s 3.9× net-debt-to-EBITDA ratio as safe. We also see its $18.33 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Newmark blew past analysts’ revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $18.61 immediately following the results.

Updated: December 4, 2025 at 9:14 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Newmark.

We see the value of companies helping consumers, but in the case of Newmark, we’re out. First off, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. On top of that, Newmark’s weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders, and its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Newmark’s P/E ratio based on the next 12 months is 10.1x. This valuation multiple is fair, but we don’t have much confidence in the company. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $20 on the company (compared to the current share price of $17.71).