Compass Group PLC (LSE:CPG) should deliver another strong set of numbers with its first quarter update on 6 February according to US broker Jefferies in spite of a mixed update this week from French rival Sodexho.
Jefferies expects 9% year-on-year organic revenue growth from the FTSE 100 contract caterer, reflecting the expected front-end loaded growth this year, with the strong second-half 2024 exit rate carrying on into the first part of the year.
Sodexo's soft start to the year reflected company-specific headwinds, particularly the weak net new wins and soft FM activity in Europe.
We expect Compass's volume momentum to remain solid, supported by recent US foot traffic data with guidance for the year pointing to high-single-digit adjusted EBIT growth, driven by organic revenue growth above 7.5% and margin progression.
What to watch for
Jefferies highlights four things to note in the Compass update
First, confirmation of the solid start to the year with the strong second-half exit rate continuing into the first part of 2025.
After that, look for commentaries on the new business pipeline; confidence on the positive net new wins momentum continuing into the second part of the year and recent like-for-like volume trends.
Buy with a 3,000p target remains the view with upside from accelerating earnings growth, as its best-in-class profile leverages the compelling industry backdrop.
Shares today were up 1% at 2,652p.