More on Compass
Compass trading statement
Compass’s LFL turnover growth remained strong at 6% in the first six months (to March 2005) of the current financial year. Compass also warned that profits would be £15m lower in its Middle Eastern business and of extra costs of £9m in the UK. However these are comparatively small in the context of Compass’s £645m (consensus) forecast EBIT for the year. The company’s expectations on cashflow remain unchanged on a constant currency basis which is also reassuring.
The current price and the little changed expectations for the year mean that Compass is trading at a prospective PE of 11.5× the consensus forecast and a price/free cashflow of 14.7×. Given that topline growth remains strong and the market does not expect much growth this year, an upside surprise looks for likely to us than a disappointment.
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