Newmark (NMRK)

Real estate services firm Newmark (NASDAQ:NMRK) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 15.3% year on year to $1.01 billion. The company’s full-year revenue guidance of $3.75 billion at the midpoint came in 3.1% above analysts’ estimates. Its non-GAAP profit of $0.68 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.

The Consumer Discretionary sector, by definition, is made up of companies selling non-essential goods and services. When economic conditions deteriorate or tastes shift, consumers can easily cut back or eliminate these purchases. For long-term investors with five-year holding periods, this creates a structural challenge: the sector is inherently hit-driven, with low switching costs and fickle customers. As a result, only a handful of companies can reliably grow demand and compound earnings over long periods, which is why our bar is high and High Quality ratings are rare.

Real estate services companies provide brokerage, property management, appraisal, and advisory services, earning transaction-based commissions and recurring management fees. Tailwinds include long-term housing demand driven by demographic growth, technology platforms that expand market access, and commercial real estate complexity that sustains advisory needs. Headwinds are pronounced: rising interest rates directly suppress transaction volumes by reducing housing affordability and commercial deal activity. Commission-rate compression, driven by discount brokerages and regulatory changes, erodes per-transaction revenue. The industry is highly cyclical, with revenue swings amplified by leverage. PropTech (property technology) disruptors threaten traditional intermediary models.

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).

A company’s long-term sales performance can indicate its overall 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 11.6% annual rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the consumer discretionary sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded.

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 15.5% over the last two years is above its five-year trend, which is encouraging.

This quarter, Newmark’s year-on-year revenue growth was 15.3%, and its $1.01 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 9.8% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges.

Newmark’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 5.5% over the last two years. This profitability was inadequate for a consumer discretionary business and caused by its suboptimal cost structure.

This quarter, Newmark generated an operating margin profit margin of 12.3%, up 2.3 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 weak 11.7% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

In Q4, Newmark reported adjusted EPS of $0.68, up from $0.55 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 $1.62 to grow 14.4%.

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

Newmark has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1.7%, lousy for a consumer discretionary business.

Newmark’s free cash flow clocked in at $608.8 million in Q4, equivalent to a 60.5% margin. This result was good as its margin was 15.1 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to 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 3.4%, 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. On average, Newmark’s ROIC increased by 1.5 percentage points annually each year over the last few years. This is a good sign, and we hope the company can continue improving.

Newmark reported $349.3 million of cash and $671.7 million 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 $562.4 million of EBITDA over the last 12 months, we view Newmark’s 0.6× net-debt-to-EBITDA ratio as safe. We also see its $10.5 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 Newmark’s optimistic full-year revenue guidance, which blew past analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 1.1% to $14.56 immediately following the results.

Updated: February 25, 2026 at 8:36 AM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Newmark, you should also grasp the company’s longer-term business quality and valuation.

We see the value of companies helping consumers, but in the case of Newmark, we’re out. 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 7.9x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $21 on the company (compared to the current share price of $14.56).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.