Compass heads FTSE 100 as reward for consistency

by Graeme Evans from interactive investor |

Keep putting in performances like this and this blue-chip will be worth buying even at record highs.

Compass (LSE:CPG) shares rose to a new record today as the food services giant further enhanced its reputation as one of the unsung heroes of the FTSE 100 index.

Up another 4% to 1,768p following an "excellent" start to the new financial year, the blue-chip stock, Thursday's best performing blue-chip, is continuing its record as a consistent performer whatever the economic weather. 

While its status as steady and reliable means Compass can sometimes be overlooked in favour of racier stocks, there was no escaping the limelight today after another share price milestone on the back of the company's AGM update.

The shares have climbed 61% since the start of 2015 and by 7% since the end of last year, although UBS analyst Jarrod Castle believes there's room for further progress as he continues to recommend a target price of 1,830p. He pointed out that organic growth of 6.9% in today's Q1 update was significantly better than the 5% forecast by UBS and other analysts.

Growth was driven by new business wins and continued strong contract retention, with new UK defence work and a positive sporting calendar helping to boost the performance.

As a result, Compass now thinks organic growth will be slightly above the mid-point of previous company guidance for between 4% to 6%. Encouragingly for trading in 2019, the regional performance is evenly spread with the largest division of North America growing revenues by 8% in the quarter, Europe by 6.4% and the Rest of the World increasing 2.8%.

Source: TradingView (*)  Past performance is not a guide to future performance

Compass told shareholders: "In the longer-term, we remain excited about the significant structural growth opportunities globally and the potential for further revenue growth and margin expansion."

The share price record also restores the company's reputation as a strong performer over the winter months. Prior to the last couple of years, it had been boasting an average return of 13.6% for the previous 10 winters.

Compass continues to trade with a projected yield of around 2.5%, following last year's 12.5% increase in the full-year dividend to 37.7p. UBS predicts an award of 42.4p this year.

It is the world's leading food services company, with revenues of £23.2 billion from operations in 50 countries under brands including Eurest and Bon Appetit. It employs over 600,000 people and serves some 5.5 billion meals a year in sectors ranging from mining and oil & gas through to healthcare and education. Clients includes HSBC (LSE:HSBA), Google (NASDAQ:GOOGL), Boeing (NYSE:BA) and Royal Dutch Shell (LSE:RDSB).

*Horizontal lines on charts represent levels of previous technical support and resistance. Trendlines are marked in red.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

get more news and expert articles direct to your inbox
Sign up for a free research account and get the latest news and discussion, and create your own Virtual Portfolio