Compass Group PLC (LON: CPG) is a provider of food and beverage services, operating in over 35 countries, including the US, Canada, India, and Singapore, alongside European markets such as the UK, France, Germany, Spain, and more. Compass Group recently announced it would cease operations in China.
Compass Group Established in 1941, the company offers catering solutions across various sectors, including business and industry, healthcare, education, sports and leisure, and remote sites.
Compass Group shares were listed on the London Stock Exchange (LSE) in 1988 under the ticker symbol CPG. While not currently a constituent of the FTSE 100 Index, it is a member of the FTSE 250 Index.
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Compass Group Share Price & Dividend Yield
Compass Group shares have been somewhat stagnant this year, rising 1.4% (as of April 19, 1014), although the stock did look to be breaking higher back in late March before a pullback. Over the last 12 months, CPG shares have gained over 7%. However, since its 2020 lows of below 1,000p per share, Compass Group has made strong gains and currently trades above the 2,100p mark.
Compass Group does pay dividends, with the current dividend yield at 1.97%.
Compass Group EPS and Revenue Breakdown 2020-2023
| Compass Group | Annual EPS | Annual Revenue |
|---|---|---|
| 2020 | 17.1p | £19.2 billion |
| 2021 | 29.5p | £18.1 billion |
| 2022 | 65.0p | £26.4 billion |
| 2023 | 86.1p | £31.3 billion |
Foodservice/Consumer Staples Stocks Comparison
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Compass Group Share Price Forecast
In March, UBS lifted its rating for Compass Group to Buy from Neutral, increasing its price target for the stock to 2,475p from 2,350p. An analyst at the investment bank sees the company as well-positioned to benefit from the market's inflection point. They also expect an acceleration in first-time outsourcing, which could boost Compass Group's revenue growth over the coming decade.
Meanwhile, in January, RBC Capital raised Compass Group to Outperform from Sector Perform, assigning the stock a new, higher price target of 2,400p, up from 1,925p. RBC believes CPG has emerged from the past four years of “unparalleled challenges” as a stronger business. They highlighted the company's enhanced growth rates and opportunity to keep expanding margins.
On the other hand, HSBC downgraded Compass Group to Hold from Buy in late January, raising the price target to 2,370p from 2,345p. The bank said it sees a lack of share catalysts for the company and believes there is better value elsewhere in the sector.
Our View: Compass Group shares have grown significantly since the 2020 lows. However, with cost pressures easing and ongoing margin progression, that growth could continue over the long term, making the stock one to possibly look further into.
Who Should Buy Compass Group Shares
Investing in stocks requires careful consideration of various factors tailored to individual circumstances and investment objectives. Compass Group is a prominent player in the food service industry, and potential investors should weigh specific aspects before deciding whether to acquire CPG shares.
CPG operates in a sector characterised by consistent demand, driven by essential services such as catering, food delivery, and support for diverse industries including healthcare and education. Investors seeking exposure to stable, consumer-driven markets may find CPG shares attractive.
CPG has demonstrated resilience and adaptability, key traits in navigating changing economic landscapes. Investors interested in companies with a track record of financial stability and operational efficiency could view CPG as a compelling investment opportunity.
Dividend considerations are significant for income-oriented investors. CPG's history of dividend payments and its potential for future growth in this area could be particularly appealing to those seeking regular income from their investments.
Long-term growth prospects should also be evaluated. Investors with a strategic focus on industry expansion and potential market share gains may find CPG shares aligned with their objectives.
Risk tolerance also plays a crucial role in deciding whether to invest in CPG shares. While the food service industry is stable, it is subject to market fluctuations and economic cycles. Investors with a moderate risk tolerance may be comfortable with potential volatility in CPG's share price.
