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Investing.com - Bernstein SocGen Group has reiterated an Outperform rating and GBP29.60 price target on Compass Group PLC (LSE:CPG), a $58.59 billion market cap company currently trading near its InvestingPro Fair Value, ahead of its fiscal year 2025 results.
The catering giant is scheduled to report its FY25 results on November 25, with Bernstein expecting performance in line with company guidance. The firm anticipates 8.4% organic sales growth, matching Bloomberg consensus, and a 7.3% EBIT margin, slightly above the 7.2% consensus estimate. The company has demonstrated strong performance with impressive gross margins of 72.78% and revenue growth of 9.58% over the last twelve months.
Bernstein highlighted Compass Group’s entrepreneurial, multi-brand approach, particularly in the United States, and its leading position in the fragmented catering market where it holds approximately 20% market share. The company plans to replicate its North American business model, which represents about 70% of group revenues, across its International division.
The firm noted Compass Group’s healthy balance sheet provides flexibility for further acquisitions, with net debt/EBITDA ratio expected to be approximately 1.4x at the end of FY25 and FY26, within the company’s target range of 1.0-1.5x. This includes the recently announced $1.6 billion acquisition of Netherlands-based Vermaat.
Bernstein also mentioned that Compass Group has not observed any macroeconomic deterioration in its main markets, particularly the United States, though the catering sector experiences different trends compared to other consumer segments.
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