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Compass (COMP)
NYSE:COMP
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Compass
(NYSE:COMP)
Rating:49Neutral
Price Target:
$6.00
▼(-4.61%Downside)
Positive Factors
Financial Performance
COMP provided preliminary results above their previous outlook, with revenue better than +8% at the midpoint, and adj. EBITDA up by 230% at the midpoint.
Market Share
COMP continues to believe they can reach 30% market share in their top 30 markets, driven by M&A and organic growth.
Revenue Growth
Forecast >20% revenue growth helped by M&A and continued share gains.
Negative Factors
Housing Market
Trimmed housing market forecast now expecting a flat market in '25E vs +5% growth prior.
Market Sentiment
The stock isn't reflecting the benefits of the recently-closed Christie's acquisition or the ability to drive organic market share gains.
Price Target
Lowering PT to $11 following 1Q results, pushing '25E adj. EBITDA estimates lower by -15%.
Compass (COMP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.34B
Dividend YieldN/A
Average Volume (3M)7.69M
Price to Earnings (P/E)―
Beta (1Y)1.65
Revenue Growth19.05%
EPS Growth78.91%
CountryUS
Employees2,566
SectorReal Estate
Sector Strength60
IndustrySoftware - Application
Share Statistics
EPS (TTM)-0.09
Shares Outstanding521,246,340
10 Day Avg. Volume5,991,166
30 Day Avg. Volume7,687,822
Financial Highlights & Ratios
PEG Ratio-0.92
Price to Book (P/B)7.80
Price to Sales (P/S)0.00
P/FCF Ratio30.04
Enterprise Value/Market Cap1.03
Enterprise Value/Revenue0.16
Enterprise Value/Gross Profit4.88
Enterprise Value/Ebitda-6.63
Forecast
1Y Price Target
$9.67Price Target Upside53.74% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Compass Business Overview & Revenue Model
Company DescriptionCompass, Inc. provides real estate brokerage services in the United States. It operates a cloud-based platform that provides an integrated suite of software for customer relationship management, marketing, client service, operations, and other functionality, as well as brokerage and adjacent services in the real estate industry. The company offers mobile apps that allow agents to manage their business anywhere as well as designs consumer-grade interfaces, an automated workflows for agent-client interactions. The company was formerly known as Urban Compass, Inc. and changed its name to Compass, Inc. in January 2021.Compass, Inc. was founded in 2012 and is headquartered in New York, New York.
How the Company Makes MoneyCompass makes money primarily through commission fees earned from real estate transactions. As a brokerage, the company employs or partners with real estate agents who facilitate property sales and rentals. Upon the successful completion of a transaction, Compass receives a percentage of the total sale or rental price as a commission. This commission is typically shared between Compass and the agent involved, based on pre-agreed terms. Additionally, Compass may generate revenue through ancillary services, such as mortgage and title services, which complement their core brokerage operations. The company's investment in technology aims to enhance agent productivity and attract top-performing agents, thereby increasing transaction volume and associated revenue. Significant partnerships with real estate professionals and technology providers further bolster Compass's market presence and revenue generation capabilities.
Compass Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -18.63%|
Next Earnings Date:Aug 11, 2025
Earnings Call Sentiment Positive
Compass, Inc. demonstrated strong financial performance with record adjusted EBITDA, significant revenue growth, and successful agent recruitment. However, market volatility and tariff-related disruptions posed challenges, impacting revenue guidance and sales transactions. Despite these challenges, the company maintained positive cash flow and continued to integrate acquisitions effectively.Q1-2025 Updates
Positive Updates
Record Adjusted EBITDA
Compass, Inc. generated a Q1 record adjusted EBITDA of $16 million, a significant turnaround from a negative $20 million in the same quarter last year.
Revenue Growth
Revenue in Q1 increased by 28.7% year over year, reaching $1.36 billion. Even excluding M&A, organic revenue increased by 14.6%.
Market Share Expansion
Compass, Inc. increased its market share to 6%, a 25 basis point increase from the previous year.
Agent Recruitment Success
The company successfully recruited 700 gross principal agents organically, a 35% increase year over year, showcasing strong recruitment momentum.
Positive Free Cash Flow
Compass, Inc. generated a record $19.5 million in free cash flow for Q1, an improvement from $5.9 million in Q1 2024.
Title and Escrow Business Growth
Momentum in the title and escrow business was strong, with attach rates up 695 basis points year over year.
Christie's Acquisition Progress
The integration of Christie's International Real Estate is ahead of plan, with four new affiliates joining the network shortly after the acquisition.
Negative Updates
Revenue Guidance at Lower End
Q1 revenue was near the low end of guidance due to market uncertainty driven by tariff discussions, impacting March transactions.
Market Volatility Impact
Existing home sales in March were at their lowest levels since February 2009, reflecting broader market volatility.
Impact of Tariffs and Market Uncertainty
The talk of tariffs and actual tariffs in March and April created market disruptions, impacting revenue growth tracking.
Settlement Payment Impact on Cash Flow
A $29 million class action settlement payment due in Q2 is expected to negatively impact free cash flow.
Company Guidance
During the call, Compass, Inc. provided guidance for the second quarter and full year of 2025, highlighting expected financial results, operating expenses, and free cash flow. For Q2 2025, the company anticipates revenue between $2 billion and $2.15 billion and adjusted EBITDA ranging from $115 million to $135 million. For the full year, they aim to keep organic operating expenses growth to 3%-4%, despite acquiring Christie's International Real Estate and other entities. In Q1 2025, Compass achieved record adjusted EBITDA of $16 million and a revenue increase of 28.7% year-over-year, with total transactions rising by 27.8%. The company also reported a market share of 6% and recruited 700 gross principal agents, a 35% year-over-year increase. Compass continues to focus on expanding its title, escrow, and mortgage attach rates, with the long-term goal of achieving adjusted EBITDA margins of 25%-30% per transaction in these areas.Compass Financial Statement Overview
Summary
Compass shows signs of financial recovery with improved revenue and positive cash flow in 2024. Despite these improvements, persistent net losses, high leverage, and a declining equity base indicate underlying financial challenges. Continued focus on profitability and balance sheet strengthening is necessary for long-term stability.Income Statement
Compass has shown a fluctuating revenue trend with a recent increase of 15.23% from 2023 to 2024, indicating potential recovery. However, persistent negative net income and EBIT margins highlight ongoing profitability challenges. The gross profit margin improved to 17.67% in 2024, suggesting better cost management but still insufficient to cover operating expenses as reflected in the negative EBIT margin of -2.75%.45
Neutral
Balance Sheet
The company's balance sheet shows moderate leverage with a debt-to-equity ratio of 1.16. Stockholders' equity has declined over recent years, raising concerns about financial stability. The equity ratio of 34.75% indicates a heavy reliance on liabilities, while the negative return on equity underscores inefficiencies in generating profits from equity investments.40
Negative
Cash Flow
Cash flow has improved, with positive free cash flow of $105.8 million in 2024, a significant turnaround from negative figures in previous years. The operating cash flow to net income ratio is positive at 0.79, showing better conversion of income to cash. However, inconsistent cash flows in prior years pose ongoing concerns.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.63B | 4.88B | 6.02B | 6.42B | 3.72B | Gross Profit |
| 994.50M | 553.00M | 1.08B | 1.11B | 663.90M | EBIT |
| -154.80M | -314.90M | -540.30M | -493.00M | -273.30M | EBITDA |
| -65.60M | -216.40M | -500.30M | -428.50M | -220.10M | Net Income Common Stockholders |
| -154.40M | -321.30M | -589.30M | -492.80M | -270.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 223.80M | 166.90M | 361.90M | 618.30M | 440.10M | Total Assets |
| 1.18B | 1.16B | 1.53B | 1.80B | 1.37B | Total Debt |
| 497.60M | 533.90M | 763.00M | 580.70M | 512.40M | Net Debt |
| 273.80M | 367.00M | 401.10M | -37.60M | 72.30M | Total Liabilities |
| 765.60M | 728.30M | 1.01B | 953.00M | 741.30M | Stockholders Equity |
| 409.40M | 428.70M | 517.10M | 843.80M | 623.80M |
| Cash Flow | Free Cash Flow | |||
| 105.80M | -37.10M | -361.80M | -78.70M | -101.40M | Operating Cash Flow |
| 121.50M | -25.90M | -291.70M | -28.60M | -58.10M | Investing Cash Flow |
| -36.60M | -11.70M | -100.10M | -192.50M | -13.40M | Financing Cash Flow |
| -28.00M | -157.40M | 135.40M | 399.30M | 19.90M |
Compass Technical Analysis
Neutral
6.29
Price Trends
7.16
Negative
7.66
Negative
6.89
Negative
Market Momentum
-0.31
Negative
45.37
Neutral
76.76
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COMP, the sentiment is Neutral. The current price of 6.29 is above the 20-day moving average (MA) of 6.10, below the 50-day MA of 7.16, and below the 200-day MA of 6.89, indicating a neutral trend. The MACD of -0.31 indicates Negative momentum. The RSI at 45.37 is Neutral, neither overbought nor oversold. The STOCH value of 76.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for COMP.
Compass Risk Analysis
Compass disclosed 60 risk factors in its most recent earnings report. Compass reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
We have integrated, and may continue to integrate in the future, machine learning and AI in certain tools and features available on our platform. Machine learning and AI technology present various operational, compliance and reputational risks and if any such risks were to materialize, our business and results of operations may be adversely affected. Q3, 2023
2.
Ongoing antitrust regulatory and/or private plaintiff litigation activities, including the Antitrust Lawsuits, could result in meaningful industry-wide changes and could have a direct or indirect materially adverse affect on our business, financial condition, and results of operations. Q3, 2023
Compass Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $4.09B | ― | -1.66% | ― | 15.72% | 74.59% | |
70 Outperform | $6.53B | 114.36 | 8.56% | ― | 27.32% | ― | |
61 Neutral | $2.83B | 10.92 | 0.41% | 8438.90% | 5.75% | -21.03% | |
60 Neutral | $2.94B | ― | -0.82% | 1.47% | -26.04% | 85.84% | |
58 Neutral | $3.50B | ― | -83.36% | ― | 9.84% | 13.74% | |
58 Neutral | $4.71B | ― | -4.16% | ― | 17.70% | 61.98% | |
49 Neutral | $3.34B | ― | -14.96% | ― | 19.05% | 78.91% |
* Real Estate Sector Average
Performance Comparison
COMP
Compass
6.29
2.76
78.19%
LYFT
Lyft
15.63
0.55
3.65%
ASAN
Asana
14.64
1.21
9.01%
ALIT
Alight
5.46
-1.88
-25.61%
INTA
Intapp
58.23
23.03
65.43%
PYCR
Paycor HCM
22.49
10.50
87.57%
Compass Corporate Events
Executive/Board ChangesShareholder MeetingsRegulatory Filings and Compliance
Compass Adopts Deferred Compensation Plan for Executives
Positive
May 29, 2025
On May 29, 2025, Compass, Inc. adopted a Deferred Compensation Plan allowing directors and selected executives to defer taxable income in compliance with tax regulations. At the annual meeting on May 22, 2025, stockholders elected three directors, ratified the appointment of PricewaterhouseCoopers LLP as the independent auditor for 2025, and approved the 2024 executive compensation, indicating strong shareholder support for the company’s governance and financial strategies.
The most recent analyst rating on (COMP) stock is a Hold with a $5.00 price target. To see the full list of analyst forecasts on Compass stock, see the COMP Stock Forecast page.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.