Narrow-Moat Compass Warming Up in H1

The improving trend was clear to see in narrow-moat Compass Group’s first-half results. Revenue grew by 38% on an organic basis, while operating margins slowly ticked up to 5.8%, still quite a way off the precoronavirus highs of 7.5%, but moving in the right direction at least. Pleasingly, management have upgraded their full-year guidance on organic revenue growth to 30%, from 20%-25%, evidence of the current momentum in the business and the reduced likelihood of material disruptions to come. While we may tweak our near-term forecasts, we do not expect this to have a consequential impact on our GBX 1,560 fair value estimate. At current levels we believe the shares are up with events.