Compass has published a 'typically strong' set of interim results, said ShoreCap, that continued to showcase the contract caterer's compounding growth rates, margin accretion, M&A and ongoing returns to shareholders.
Management now expects full-year operating profit growth towards 15% with organic revenue towards 10%, versus the towards 13% growth previously guided.
“This implies operating profit of c$2,980m compared to our current estimates $2,922m, with an operating margin improving to around 7.1%.
“Guidance, in our view, remains conservatively set,” said the broker.
“On 24 times current year earnings the current valuation is consistent with historic metrics, although the profile is arguably now improved, capable of delivering stronger organic revenue growth and more exposed to lower cyclical Healthcare and Education sectors.”
Buy is the broker’s view.