Analyst Note| Michael Field, CFA |
Having prereleased its first-half results toward the end of the second quarter, there were no huge surprises in today’s update from narrow-moat Compass Group. That being said, trends continue to improve, with operating margins 20 basis points ahead of the 4% reported at quarter-end, and 150 basis points higher than the 2.7% delivered in the first quarter. The path to recovery may not be perfectly linear for Compass, but with its main exposures in the U.S. and the U.K., two regions in which the vaccination program is at an advanced stage, we believe things are definitely on the up. We reiterate our GBX 1,560 fair value estimate and believe the shares are now up with events.