Marcus & Millichap (MMI)

Real estate brokerage and services firm Marcus & Millichap (NYSE:MMI) met Wall Streets revenue expectations in Q3 CY2025, with sales up 15.1% year on year to $193.9 million. Its GAAP profit of $0.01 per share was 80% below analysts’ consensus estimates.

Company Overview

Founded in 1971, Marcus & Millichap (NYSE:MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.

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.

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

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. Unfortunately, Marcus & Millichap’s 1.3% annualized revenue growth over the last five years was weak. This fell short of our benchmarks and is a rough starting point for our analysis.

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. Marcus & Millichap’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

Marcus & Millichap also breaks out the revenue for its most important segments, Brokerage and Financing, which are 83.6% and 13.6% of revenue. Over the last two years, Marcus & Millichap’s Brokerage revenue (commission fees) averaged 10.5% year-on-year growth while its Financing revenue (financing fees) averaged 32.3% growth.

This quarter, Marcus & Millichap’s year-on-year revenue growth was 15.1%, and its $193.9 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 13.8% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and suggests its newer products and services will spur better top-line performance.

Marcus & Millichap’s operating margin has risen over the last 12 months, but it still averaged negative 5.8% over the last two years. This is due to its large expense base and inefficient cost structure.

Marcus & Millichap’s operating margin was negative 1.2% this quarter. The company's consistent lack of profits raise a flag.

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.

Sadly for Marcus & Millichap, its EPS declined by 16.6% annually over the last five years while its revenue grew by 1.3%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

In Q3, Marcus & Millichap reported EPS of $0.01, up from negative $0.14 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Marcus & Millichap’s full-year EPS of negative $0.16 will flip to positive $0.53.

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.

Marcus & Millichap broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Marcus & Millichap hasn’t been the highest-quality company lately because of its poor revenue and EPS performance, it historically found a few growth initiatives that worked. Its five-year average ROIC was 18.3%, higher than most consumer discretionary businesses.

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, Marcus & Millichap’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

Marcus & Millichap is a well-capitalized company with $252.7 million of cash and $78.56 million of debt on its balance sheet. This $174.2 million net cash position is 15.3% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We were impressed by how significantly Marcus & Millichap blew past analysts’ EBITDA expectations this quarter. On the other hand, its EPS missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $29.48 immediately after reporting.

Updated: December 4, 2025 at 9:06 PM EST

Before investing in or passing on Marcus & Millichap, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Marcus & Millichap doesn’t pass our quality test. To kick things off, its revenue growth was weak over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its declining EPS over the last five years makes it a less attractive asset to the public markets. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Marcus & Millichap’s P/E ratio based on the next 12 months is 60.4x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $29 on the company (compared to the current share price of $29.11).