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Compass Group PLC CPG

Rating as of

Morningstar’s Analysis

Valuation
Currency in GBX
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Narrow-Moat Compass Firmly on the Path to Recovery

Michael Field, CFA Senior Equity Analyst

Analyst Note

| Michael Field, CFA |

Organic revenue rose by 36% in third quarter for narrow-moat Compass, following declines of 27% and 34% in the second and first quarters respectively. Such is the nature of easy comparative periods, however, with the business finally lapping the first full quarter of COVID-19-impacted revenue. While revenue is tracking our full-year expectations, operating margins, which rose to 5% in quarter three, are running slightly ahead of our full-year estimate of 4%. Although we may tweak our near-term estimates, we do not expect this will have a material impact on our GBX 1,560 fair value estimate. We believe the shares are currently up with events.

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Company Profile

Business Description

Compass Group is the largest food-service company globally, operating in more than 50 countries with annual sales of almost GBP 25 billion. Compass Group’s model stems from operating on-premises catering facilities, rather than centralised industrial kitchens. Food services is Compass' core focus and contributes close to 85% of revenue. In addition, the company provides support services to clients through activities including cleaning services, office services (for example, concierge services), grounds maintenance, and so on.

Contact
Guildford Street, Compass House
Chertsey, Surrey, KT16 9BQ, United Kingdom
T +44 1932573000
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings
Fiscal Year End Sep 30, 2021
Stock Type
Employees 548,132

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