Compass (1K) | Buy | Stronger than expected H1 print

Research evidence excerpt

Compass (1K) | Buy | Stronger than expected H1 print

Compass Buy | Target Price: USD40.00

Upgraded confidence in the compounding model

Compass delivered yesterday a robust H1 FY26 print, demonstrating the consistency of its model:

organic revenue growth remained solid at 7.2% during the first half of the year, revenue grew 9%

at constant currency, underlying operating profit rose 11.7%, and group UOP margin expanded

20bps to 7.4%. The revenue bridge was a high-quality one in our view, including 3.8% net new

business, 2.7% pricing, 0.7% like-for-like volume, and a 1.5% M&A revenue contribution. Retention

remained strong at 96%, while new business wins increased 14% YOY to USD4.1bn, with more than

half from first-time outsourcing, reinforcing management’s view that the growth story remains

structurally driven.

Strong performance in each region

North America delivered 7.2% organic growth, 8.1% revenue growth at constant currency, and

9.5% UOP growth, with margin up 10bps to 8.4%. Management described North America as

continuing to “fire on all cylinders”, with Business & Industry still the fastest-growing sector

(despite AI worries) and organic growth in that vertical at a double-digit rate. Compared with Q1,

the tone remained consistent, B&I and Sports & Leisure were still the strongest areas, and volumes

remained positive, although Q2 net new was temporarily held back by adverse weather delaying

mobilisations at several North American sites. Compass argued that the LTM net new metric, at

4.2%, is the better indicator and expects acceleration in H2.

International remains the more interesting margin story in our view. Organic revenue growth was

7.1%, close to North America, while reported constant-currency revenue growth was 9.8%, helped

by M&A (and favourable FX).