Narrow-Moat Compass Serves Up a Tasty Third Quarter

It seems narrow-moat Compass Group is gaining momentum, with organic revenue growth of 43% in the third quarter, picking up from the first half of the year. New business growth was strong at 9%, while retention rates were more than 96% for the period, very much at the top end of what we have seen historically. With management raising their guidance for the full year, it is likely we will make some adjustments to our near-term estimates, but we don’t expect this to change our view of the stock. Relative to our GBX 1,760 fair value estimate, shares are fairly valued.