By Michael Susin
Compass Group is scheduled to report results for fiscal 2023 on Monday. Here is what you need to know:
REVENUE FORECAST: The U.K. catering contractor is expected to report a revenue increase to 31.2 billion pounds ($38.73 billion) from GBP25.5 billion reported in fiscal 2022, according to company-provided consensus estimates.
PRETAX PROFIT FORECAST: The group’s pretax profit is expected to increase to GBP1.84 billion from GBP1.47 billion, according to analyst estimates from FactSet.
ADJUSTED EBIT FORECAST: Underlying operating profit–which strips out exceptional and other one-off items–is seen coming in at GBP2.12 billion, up from GBP1.59 billion, while the underlying margin is expected to improve to 6.8% from 6.2%, according to the company-compiled consensus.
WHAT TO WATCH:
–2024 OUTLOOK: Compass should be on track to achieve adjusted earnings per share growth of around 13% in fiscal 2024, supported by high single-digit organic revenue growth, Stifel analysts Simon Lechipre and Tatiana Velandia said in a note. Easing inflationary pressures could lift expectations, they said.
–MARGIN IMPROVEMENT: Recent peers’ comments regarding moderating inflation should support further margin improvement, along with operating leverage from new business wins, the analysts add. Stifel’s fiscal 2024 margin estimate of 7.1% is “relatively safe,” and even has potential upside risk, they said.
–LONG-TERM GUIDANCE: The company’s long-term targets include mid-to-high single-digit organic revenue growth and a return to its historical margin, with profit growing stronger than revenue.
Write to Michael Susin at [email protected]
Read the full article here
