By Compass Group is set to release its fiscal 2023 results on Monday. Here are the key details you should know:
Revenue Forecast
The U.K.-based catering contractor is expected to report a revenue increase to £31.2 billion ($38.73 billion) from the £25.5 billion reported in fiscal 2022, as per company-provided consensus estimates.
Pretax Profit Forecast
Analyst estimates from FactSet suggest that the group’s pretax profit is expected to rise to £1.84 billion from £1.47 billion in the previous fiscal year.
Adjusted EBIT Forecast
According to the company-compiled consensus, underlying operating profit (which excludes exceptional and other one-off items) is projected to reach £2.12 billion, up from £1.59 billion. Additionally, the underlying margin is expected to improve to 6.8% from 6.2%.
What to Watch
2024 Outlook
Stifel analysts Simon Lechipre and Tatiana Velandia state that Compass should be on track to achieve approximately 13% adjusted earnings per share growth in fiscal 2024, supported by high single-digit organic revenue growth. They also note that easing inflationary pressures could raise expectations.
Margin Improvement
The analysts further suggest that recent comments from peers regarding moderating inflation should aid in margin improvement. They anticipate operating leverage from new business wins and estimate a fiscal 2024 margin of 7.1%, which they consider relatively safe with potential upside risk.
Long-Term Guidance
Compass Group’s long-term targets include mid-to-high single-digit organic revenue growth and a return to its historical margin, with stronger profit growth compared to revenue.
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