Compass (COMP) has been making significant strides in the real estate brokerage sector with its technology-driven platform. The company reported a Q4 revenue of $1.38 billion, marking a substantial 25.9% year-over-year increase. Its focus on expanding the Title and Escrow (T&E) business has paid off, as it achieved record growth for the quarter, accompanied by a notable increase in profitability. For 2025, Compass aims to continue this trend of growth with plans to double the T&E segment’s adjusted EBITDA. The Wall Street Journal recently reported that discussions were underway for a potential acquisition of Berkshire Hathaway’s residential real estate brokerage unit, a move denied by Berkshire, signaling possible consolidation in a sluggish housing market. The stock is up roughly 60% year-to-date.
Pursuing Significant Growth
Compass is the largest brokerage in the U.S. by volume. Compass offers a comprehensive cloud-based platform that integrates various essential services for real estate brokerage in the United States. This platform includes tools for customer relationship management, marketing, client service, and operations, among others. Additionally, Compass offers mobile applications that enable real estate agents to conduct business operations efficiently from anywhere. This suite of services positions Compass as a versatile provider of both brokerage services and technological solutions in the real estate sector.
The company is pursuing significant growth opportunities within its Title and Escrow (T&E) business segment, which plays a crucial role in real estate transactions by ensuring clear property ownership and facilitating the secure transfer of funds. The segment almost quadrupled its profitability compared to the previous year. For 2025, Compass aims to double the adjusted EBITDA of the T&E segment, with Q4 results indicating progress toward this goal as adjusted EBITDA reached $16.7 million.
In the fourth quarter of 2024, the company posted a significant year-over-year revenue increase of 25.9%, reaching $1.4 billion, fueled by a 24.1% rise in transactions. Organic revenue growth was 20.9%, with 5% of the growth attributed to acquisitions made within the last year. The GAAP net loss for the quarter was reduced to $40.5 million, a $43.2 million improvement from the previous year. Adjusted EBITDA improved dramatically from a negative $23.7 million to a positive $16.7 million. Operating cash flow and free cash flow were reported at $30.5 million and $26.7 million, respectively. By the end of the quarter, the company held $223.8 million in cash and cash equivalents.
Analysts Cautiously Optimistic
Analysts following the company have a cautiously optimistic outlook on the stock. For instance, in a recent report, analyst Bernie McTernan from Needham reiterated a Buy rating on the shares with a target price of $12.00, noting the company’s strategy to capture a 30% market share in its top 30 markets next year through mergers, acquisitions, and organic expansion.
Compass is rated a Moderate Buy overall, based on the recent recommendation of six analysts. The average price target for COMP stock is $10.58, which represents a potential upside of 13.28% from current levels.
