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Compass Group PLC (GB:CPG)
LSE:CPG

Compass (CPG) AI Stock Analysis

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GB

Compass

(LSE:CPG)

72Outperform
Compass Group's strong financial performance and optimistic earnings call guidance are key strengths, indicating robust growth prospects. However, technical indicators suggest caution with potential downward momentum. The high P/E ratio raises valuation concerns, and rising interest expenses and volume growth uncertainty present risks. Overall, the stock demonstrates potential for growth but faces short-term challenges.
Positive Factors
Company Focus
The portfolio rationalisation is now complete and leaves a more focused company, becoming a tailwind.
Contract Wins
Strong contract win momentum is seen with the company winning over double its historical pace of net contract wins in USD terms.
Negative Factors
Interest Costs
Higher interest costs are 20% more than prior estimates, reflecting higher than expected M&A spend and the impact of debt refinancing.

Compass (CPG) vs. S&P 500 (SPY)

Compass Business Overview & Revenue Model

Company DescriptionCompass (CPG) is a technology-driven real estate brokerage firm that operates in the real estate sector. The company utilizes a cutting-edge platform to facilitate residential real estate transactions, offering a suite of services for buying, selling, and renting homes. By integrating technology with traditional real estate practices, Compass aims to enhance the experience for agents and clients alike.
How the Company Makes MoneyCompass generates revenue primarily through commissions on real estate transactions. As a brokerage, it earns a percentage of the sale price of properties facilitated through its platform. The company also invests in developing proprietary technology tools to improve agent productivity and client engagement, which can drive more transactions and higher commissions. Additionally, Compass may engage in partnerships with real estate developers and other industry stakeholders to enhance its service offerings and market reach.

Compass Financial Statement Overview

Summary
Compass exhibits strong financial health across all key areas. The impressive revenue and profit growth, coupled with efficient cash flow management and a stable balance sheet, positions the company well for future growth. However, maintaining control over debt levels and enhancing equity proportion could further strengthen its financial position.
Income Statement
85
Very Positive
Compass has shown impressive revenue growth from 2023 to 2024, with a 35.36% increase. The company maintains a healthy gross profit margin of 33.15% and a solid net profit margin of 3.34%. The EBIT and EBITDA margins of 6.05% and 8.12%, respectively, indicate strong operational efficiency. Overall, the income statement reflects robust growth and profitability.
Balance Sheet
78
Positive
Compass's balance sheet is stable with a debt-to-equity ratio of 0.87, indicating manageable leverage. The return on equity is 20.56%, showcasing efficient utilization of equity capital. An equity ratio of 28.05% suggests a balanced capital structure. While the company maintains a healthy position, slight improvements in equity proportion could enhance stability.
Cash Flow
82
Very Positive
The company demonstrates strong cash flow management, with a significant operating cash flow to net income ratio of 2.23. Free cash flow has grown by 22.18% from 2023 to 2024, supporting the company's operational and growth activities. The free cash flow to net income ratio of 1.59 further emphasizes positive cash flow generation relative to earnings.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
31.81B42.00B31.03B25.51B17.91B19.94B
Gross Profit
2.14B13.93B1.95B1.48B962.00M3.76B
EBIT
2.17B2.54B2.25B1.45B990.00M570.00M
EBITDA
2.72B3.41B2.74B2.35B1.28B915.00M
Net Income Common Stockholders
1.36B1.40B1.31B1.24B357.00M133.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
695.00M623.00M1.03B1.99B1.84B1.48B
Total Assets
17.77B24.35B21.48B18.75B14.87B14.73B
Total Debt
5.84B5.91B5.27B4.88B4.48B4.72B
Net Debt
5.14B5.29B4.24B2.89B2.64B3.24B
Total Liabilities
12.59B17.44B15.18B12.84B9.95B9.92B
Stockholders Equity
5.14B6.83B6.26B5.87B4.89B4.79B
Cash FlowFree Cash Flow
1.51B2.23B1.83B1.31B943.00M205.00M
Operating Cash Flow
2.25B3.13B2.17B1.60B1.17B914.00M
Investing Cash Flow
-1.32B-1.49B-1.23B-874.00M-727.00M-1.10B
Financing Cash Flow
-1.42B-1.94B-2.09B-693.00M-152.00M1.28B

Compass Technical Analysis

Technical Analysis Sentiment
Negative
Last Price2660.00
Price Trends
50DMA
2726.55
Negative
100DMA
2664.69
Negative
200DMA
2482.05
Positive
Market Momentum
MACD
-34.07
Positive
RSI
37.11
Neutral
STOCH
21.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:CPG, the sentiment is Negative. The current price of 2660 is below the 20-day moving average (MA) of 2742.30, below the 50-day MA of 2726.55, and above the 200-day MA of 2482.05, indicating a neutral trend. The MACD of -34.07 indicates Positive momentum. The RSI at 37.11 is Neutral, neither overbought nor oversold. The STOCH value of 21.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:CPG.

Compass Peers Comparison

Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GBCPG
72
Outperform
£44.65B40.5021.72%1.81%6.81%-14.09%
GBMAB
66
Neutral
£1.30B8.606.35%4.27%
GBJDW
66
Neutral
£692.19M14.3112.18%2.07%5.74%-16.78%
60
Neutral
£1.03B25.127.71%1.45%-61.69%
59
Neutral
$12.43B10.562.81%3.69%1.58%-17.58%
59
Neutral
£1.26B46.0612.09%2.21%14.07%236.27%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:CPG
Compass
2,660.00
530.48
24.91%
GB:MAB
Mitchells & Butlers
222.50
-13.10
-5.56%
GB:SSPG
SSP Group plc
157.90
-53.79
-25.41%
GB:JDW
J D Wetherspoon
592.50
-201.76
-25.40%
GB:WOSG
Watches of Switzerland Group PLC
435.40
57.40
15.19%

Compass Earnings Call Summary

Earnings Call Date: Nov 26, 2024 | % Change Since: 1.48% | Next Earnings Date: May 14, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial and operational performance with significant growth in key metrics and strategic investments driving future opportunities. However, challenges such as rising interest expenses and uncertainty in volume growth temper the overall optimism.
Highlights
Strong Financial Performance
Operating profit increased by 16% with organic revenue growth of 11% and EPS up by 15%.
Net New Business Growth
Net new business was 4.2% for the year, accelerating to 4.8% in the second half, providing good momentum into 2025.
Strategic Investments and M&A
Invested $2.6 billion in CapEx and M&A, including acquisitions in the UK, Germany, France, and Norway, enhancing growth opportunities.
High Retention Rates
Improved retention rates, with second half retention above 96% and strong new business wins in sectors like B&I.
Positive Market Dynamics
Favorable outsourcing trends and market opportunities, especially in North America and Europe, supporting sustained growth.
Lowlights
Increased Interest Expense
Interest expenses increased to $249 million due to higher interest rates and debt, projected to rise to $300 million in fiscal year '25.
Impact of Acquisitions and Disposals
Net impact of acquisitions and disposals expected to reduce profit in fiscal year 2025 by around $30 million.
Volume Growth Uncertainty
Volume growth moderated to around 2% and remains difficult to predict, with potential net positive but uncertain outlook.
Company Guidance
During the 2024 full year results call, Compass Group provided detailed guidance for fiscal year 2025, highlighting expectations for high single-digit operating profit growth driven by organic growth above 7.5%. The company anticipates continued margin improvement and net new business growth within a 4% to 5% range, marking an acceleration in the second half of 2024 to 4.8%. The guidance reflects pricing trends aligned with inflation at 2% to 3% and a likely net positive volume growth, despite a moderation to around 2% in 2024. The company also plans to sustain high revenue and profit growth across all regions, with a forecasted group operating profit increase of 16% to $3 billion. Interest expenses are expected to rise to $300 million due to acquisition activities, while the effective tax rate is projected to remain at 25.5%. Capital expenditure is anticipated to be around 3.5% of revenue. Compass Group's ongoing investment in its portfolio, including recent acquisitions such as Dupont Restauration in France, aims to unlock further growth opportunities and drive the company's long-term compounding shareholder returns.

Compass Corporate Events

Regulatory Filings and Compliance
Compass Group Announces Total Voting Rights and Capital Structure
Neutral
Mar 3, 2025

Compass Group PLC announced its total voting rights and capital structure as of February 28, 2025. The company has a total of 1,785,403,977 ordinary shares, with 1,697,430,179 shares admitted to trading and 87,973,798 shares held in treasury. The voting rights for the shares admitted to trading are 1,697,430,179, with each share carrying one vote, while treasury shares have suspended voting rights. The announcement also highlights the inclusion of shares traded as American Depositary Shares on the New York Stock Exchange within the total voting rights figure, which is crucial for shareholders to determine their notification obligations under the FCA’s rules.

Executive/Board ChangesBusiness Operations and Strategy
Compass Group Issues Executive Incentive Awards Aligned with New Policy
Neutral
Feb 13, 2025

Compass Group PLC announced the issuance of top-up conditional awards under its Long Term Incentive Plan 2018 to key executives, including CEO Dominic Blakemore, CFO Petros Parras, and COO Palmer Brown. This move aligns with the 2025 Remuneration Policy approved by shareholders, reflecting the company’s commitment to aligning executive incentives with shareholder interests. The awards are contingent upon fulfilling performance conditions over a three-year period, indicating a strategic approach to retain and motivate top management which could impact the company’s operational focus and stakeholder confidence.

DividendsBusiness Operations and Strategy
Compass Group Announces Sterling Equivalent of Final Dividend
Neutral
Feb 11, 2025

Compass Group PLC, a company that provides food service management and support services, announced the sterling equivalent of its final dividend. The final dividend is set at 31.42 pence per ordinary share, based on a US dollar to sterling exchange rate achieved through forward contracts. This announcement reflects Compass Group’s financial strategy in currency management, potentially impacting its stakeholders by demonstrating a calculated approach to international financial operations.

Executive/Board ChangesShareholder MeetingsDividends
Compass Group PLC Successfully Passes All Resolutions at AGM
Neutral
Feb 6, 2025

Compass Group PLC held its Annual General Meeting on February 6, 2025, where all proposed resolutions were passed following a poll. The resolutions included receiving the Directors’ Annual Report and Accounts, approving the Directors’ Remuneration Policy and Report, electing and re-electing board members, declaring a final dividend, and re-appointing auditors, among others. The board expressed gratitude to shareholders for their support, and the results will be made available on the company’s website and the National Storage Mechanism.

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Compass Group Reports Strong Q1 Growth and Strategic Investments
Positive
Feb 6, 2025

Compass Group PLC reported a strong start to the year with a 9.2% organic revenue growth for the first quarter of 2025, driven by continued positive outsourcing trends and strong client retention across all regions. The company invested approximately $1.0 billion in mergers and acquisitions, including the acquisition of Dupont Restauration in France and 4Service in Norway, while divesting operations in Chile and Kazakhstan. Despite potential negative impacts from foreign exchange rates, Compass maintained its guidance for 2025, expecting high single-digit operating profit growth and over 7.5% organic revenue growth.

Regulatory Filings and Compliance
Compass Group PLC Announces Share Capital and Voting Rights Structure
Neutral
Feb 3, 2025

Compass Group PLC announced its total voting rights and capital structure as of January 31, 2025. The company reported 1,785,403,977 ordinary shares, with 1,697,430,179 admitted to trading and 87,973,798 held in treasury. The voting rights for shares held in treasury are suspended, and the company sponsors a Level 1 American Depositary Receipt Programme, facilitating trading on the New York Stock Exchange. This announcement aids shareholders in determining their notification obligations under FCA rules.

Compass Group PLC Announces Total Voting Rights and Capital for 2024
Jan 2, 2025

Compass Group PLC announced its total voting rights and capital as of December 31, 2024. The company has issued 1,785,403,977 ordinary shares, with 1,697,430,179 shares admitted to trading and 87,973,798 shares held in treasury. The total number of voting rights for shares admitted to trading is 1,697,430,179, with each share carrying one vote, while treasury shares have suspended voting rights. The announcement also included details about its level 1 American Depositary Receipt Programme, where shares are traded on the New York Stock Exchange. This information helps shareholders determine their interest or changes in interest regarding Compass Group PLC.

Compass Group PLC Releases 2024 Annual Report and Sets 2025 AGM Date
Dec 18, 2024

Compass Group PLC has published its Annual Report for 2024 and announced the Notice of its 2025 Annual General Meeting, scheduled for February 6, 2025. These documents, including the Form of Proxy, are now available on the company’s website and have been submitted to the National Storage Mechanism for inspection, reflecting the company’s commitment to transparency and compliance with regulatory standards.

Compass Group Advances Share Buyback with Latest Purchase
Dec 18, 2024

Compass Group PLC has executed a share buyback, purchasing 59,960 ordinary shares on December 17, 2024, as part of the second and final stage of its $500 million buyback program. The shares will be held in treasury to meet obligations related to employee share schemes. This strategic move aims to enhance shareholder value and optimize the company’s capital structure, reflecting a commitment to return capital to shareholders.

Compass Group Announces Director’s Share Transaction
Dec 17, 2024

Compass Group PLC announced the vesting of conditional awards under its Long Term Incentive Plan 2018 for Palmer Brown, the Group COO for North America. The transaction involved the acquisition of shares and subsequent sale to meet tax obligations, reflecting the company’s strategic incentive structures to align management interests with shareholder value.

Compass Group Continues Share Buyback Program
Dec 17, 2024

Compass Group PLC has recently executed a share buyback of 61,201 ordinary shares, purchased on the London Stock Exchange, as part of its ongoing $500 million buyback program. This transaction, facilitated by J.P. Morgan Securities plc, is intended to meet obligations related to employee share schemes and reflects the company’s strategy to manage its capital structure effectively, while potentially enhancing shareholder value.

Compass Group Completes $500 Million Share Buyback
Dec 16, 2024

Compass Group PLC announced the purchase of 60,064 of its ordinary shares as part of its ongoing share buyback program. This transaction marks the completion of the company’s $500 million buyback initiative, which aims to manage share capital efficiently and meet obligations related to employee share schemes. The buyback is expected to have implications for the company’s market positioning, potentially enhancing shareholder value and financial stability.

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.