Shares in foodservice group Compass (CPG) gained 2.3% to $30.17 after the firm raised its FY26 profit outlook. On an underlying basis, the company now sees operating profit rising 11% instead of 10% previously.
Margin improvement
For H1 to March 2026, Compass registered underlying operating growth of 12%, ahead of forecasts. The firm attributed the better outturn to higher revenue and M&A synergies which led to an improvement in margins.
Revenue for H1 rose 9% to $25 billion with underlying organic growth of 7.2%, slightly ahead of forecasts. Revenue from existing clients was strong, with client retention an impressive 96% during the half.
New business wins were also strong, rising 14% to $4.1 billion with 50% coming from first-time customers. The firm expects new client onboarding to accelerate in H2 to September 2026.
‘We’ve delivered a strong first-half performance, with underlying operating profit up 12%, enabling us to increase our full-year profit guidance,’ commented CEO Dominic Blakemore. ‘We have great momentum across the business, driven by excellent new business wins, high levels of client retention and margin progression in both regions.
‘We continue to invest in our competitive advantages – our sectorised model, purchasing scale and technology capabilities. By deploying data, technology and AI, we are operating more effectively and consistently at scale, improving decision-making and execution across the business,’ added Blakemore.
Compass has always been a quality business, and it operates in a market which could reach $600 billion in a decade. Underlying market growth is around 5%, so with 7% organic sales growth the firm continues to gain share.
For existing customers, there is comfort in the knowledge they are providing staff with a quality service. For new customers, outsourcing to experts solves complex issues like keeping up with regulations and catering for allergens.
The shares have gone off the boil in the last year while the market has been chasing tech stocks. That means they have de-rated, as earnings have gone up in the meantime.
However, all that means as far as our calculations go is the stock is less expensive than it was. Interestingly, the early 5% pop has faded and the shares have settled down – we see no need to chase them.
Read the press release here:
https://www.compass-group.com/en/investors.html
