Narrow-Moat Compass Points the Way in 2022

Organic revenue growth of almost 40% was the headline, but the real news in narrow-moat Compass Group’s full-year results was that revenue in the final quarter of the year was at 116% of precoronavirus levels. Couple this with an operating margin that improved to 6.5% in the second half of the year, just 100 basis points shy of prepandemic peaks, and the outlook is looking bright for the world’s largest caterer. With its recovery taking shape roughly as we had anticipated, we do not expect to make any material changes to our forecasts for 2023. As the current share price is hovering right around our GBX 1,880 fair value estimate, we believe the shares are in line with events.