Compass Group PLC (LON: CPG), the world’s largest contract caterer, heads into December 2025 with fresh full-year numbers, upbeat guidance for 2026 – and a new wave of analyst upgrades that contrast with a share price that has lagged the wider market.
As of 1 December 2025, Compass Group shares trade around 2,350–2,400 pence in London, near the bottom of their 52-week range of roughly 2,333p–2,853p. Investing Despite solid operational performance, the stock is down more than 10% year-to-date and has underperformed the FTSE 100 by about 30%, according to RBC and recent market coverage. Reuters
Yet Wall Street and City analysts are, if anything, getting more optimistic.
Full-Year 2025 Results: Double-Digit Profit Growth and Strong Cash Flow
Compass reported results for the year ended 30 September 2025 on 25 November, delivering another year of strong growth and margin progress. Compass Group Corporate Website
Key FY25 highlights (underlying, constant currency):
- Revenue: $46.1 billion, up 8.7% organically
- Underlying operating profit: $3.335 billion, up 11.7%
- Underlying operating margin:7.2%, up 10 bps year on year
- Underlying EPS: up 11.1%
- Underlying free cash flow: $1.975 billion, up 13.5%
- Annual dividend per share: up 10.2% to 65.9 cents
Operationally, the growth engine remains North America:
- Organic revenue up 9.1% in North America and 7.7% in International
- Net new business growth of 4.5%, within the group’s 4–5% structural target
- Client retention above 96% and around $3.8bn of new business wins over the year Compass Group Corporate Website
According to Reuters, Compass beat consensus forecasts with underlying operating profit of $3.34 billion and revenue of $46.1 billion, versus analyst expectations of $3.31 billion and $45.4 billion respectively. Reuters
The combination of mid- to high-single-digit organic growth, modest margin expansion and strong cash conversion is exactly what many investors look for in a “compounding” business – which helps explain why analyst sentiment has turned increasingly positive, even as the share price has stumbled.
Strategy and M&A: Vermaat Deal Extends European Footprint
Compass has continued to lean on bolt-on mergers and acquisitions to deepen its presence in attractive niches.
In its Q3 2025 trading update, the group reported: Compass Group Corporate Website
- 8.6% organic revenue growth in Q3 and 8.5% year-to-date
- Net new business growth in the middle of the 4–5% target range
- Over 96% client retention
- $1.1 billion net M&A spend year-to-date
The marquee move was an agreement to acquire Vermaat Groep B.V., a leading premium foodservice player in Europe, for about €1.5 billion. Management frames Vermaat as a way to expand higher-end on-site concepts and retail-style food offerings across European markets, complementing Compass’s existing scale. Compass Group Corporate Website
In the full-year statement, Compass highlighted that M&A and capex are central to its growth algorithm:
- Around $1.5bn invested in capex (3.3% of revenue)
- Around $1.3bn in M&A, with integrations “ahead of schedule”
- An estimated total addressable market (TAM) of c.$360bn, which the company is expanding as it adds new capabilities Compass Group Corporate Website
That TAM figure lines up with RBC’s estimate and their view that Compass has less than 15% share of its market, leaving a long runway as more food and support services are outsourced. Investing
2026 Guidance: Slower Revenue, Still Double-Digit Profit Growth
Management’s guidance for the 2026 financial year is deliberately conservative – and that is one reason the shares fell on results day.
For FY26, Compass expects: Compass Group Corporate Website
- Underlying operating profit growth around 10%
- Organic revenue growth around 7%, versus 8.7% in 2025
- Around 2% additional profit growth from M&A (including Vermaat)
- Continued margin progression
Over the long term, Compass reiterates its “growth algorithm”:
- Mid- to high-single-digit organic revenue growth
- Ongoing margin expansion
- Profit growth ahead of revenue growth
The main reason revenue growth is expected to slow is lower inflation. The company benefited significantly from pricing in recent years; as inflation decelerates, management expects to pass some of the benefit back to clients, mechanically reducing the revenue growth rate. Reuters
In a post-earnings call cited by Reuters, CFO Petros Parras acknowledged that inflation is easing faster than previously assumed, which pushes Compass to give more conservative top-line guidance even as volumes and new business remain healthy. Reuters
That nuance matters: the story is less about demand softening and more about pricing normalising.
Latest Analyst Sentiment: Upgrades and Higher Price Targets
RBC turns bullish on 1 December 2025
On 1 December 2025, RBC Capital Markets upgraded Compass Group from “sector perform” to “outperform”, raising its target price from 2,700p to 2,775p. Investing
RBC’s thesis, summarised:
- The share price pullback has created a more attractive entry point in a “high-quality compounder”.
- The stock has underperformed the FTSE 100 by around 30% year-to-date, despite solid fundamentals.
- Forward 12-month P/E has fallen back to roughly 21.5x, close to Compass’s adjusted 10-year average, putting the stock in “growth at a reasonable price” territory for FY26.
- RBC models revenue rising from about $46.1bn in FY25 to $50.3bn in FY26 and $54.0bn in FY27, with margins grinding higher. Investing
Crucially, RBC directly addresses three thematic worries that have been hanging over Compass:
- Macro and consumer spending: The bank notes that on-site participation rates are rising and that Business & Industry – essentially office and corporate feeding – is currently the fastest-growing vertical. Investing
- Artificial intelligence (AI): Rather than a threat, AI data-centre campuses and tech customers are framed as a net positive in the near term, helping Compass win new contracts. Investing
- GLP-1 weight-loss drugs: RBC argues that fears of structurally lower food volumes are overstated once you factor in pricing power and menu mix adjustments. Investing
Citigroup, Goldman Sachs and others join the bull camp
RBC’s move follows a flurry of positive calls in late November:
- Citigroup upgraded the U.S. OTC ADR CMPGY to “strong buy” on 30 November, noting recent upgrades from other brokers and a one-year trading range of $29.88–$36.70. MarketBeat
- MarketBeat shows Compass with an average “Moderate Buy” rating on the London line, based on six analysts (5 Buy, 1 Hold) and an average 12-month price target of 2,920p, implying about 25% upside from c. 2,343p. MarketBeat
- Investing.com aggregates a broader sample of 19 analysts, with a consensus “Buy” rating and an average target of around 2,841p (roughly 21% upside), within a range of ~2,193p–3,232p. Investing
On the U.S. side, ADR-focused services such as Barron’s and Zacks list average targets around $38–$40 for CMPGY, versus a last close in the low $30s, again pointing to mid-20s percentage upside potential. Barron’s
Put simply: across both sides of the Atlantic, the analyst community largely agrees that Compass is a buy with meaningful upside, even if the near-term growth rate moderates.
Valuation: Quality at a Price
Valuation is where the debate gets interesting.
Based on recent market data:
- London-listed CPG trades around 2,350–2,400p, close to its 52-week low. Investing
- RBC cites a forward P/E of c. 21.5x FY26 earnings, roughly in line with the 10-year average. Investing
- MarketBeat’s longer-term snapshot suggests a trailing P/E in the low 30s, reflecting strong recent earnings but also a historically premium rating. MarketBeat
That leaves Compass comfortably more expensive than the broader UK market, but broadly in line with other global “compounder” staples and business-service companies.
Pros highlighted by MarketBeat’s bull-case summary include: MarketBeat
- A market cap around £40 billion, signalling scale and resilience.
- Consistent revenue growth and strong cash generation.
- Recent analyst upgrades and rising price targets.
On the flip side, their bear-case points emphasise:
- A rich earnings multiple, which leaves less room for disappointment.
- A relatively elevated debt-to-equity ratio and sub-1x current ratio, which investors may view cautiously in a downturn. MarketBeat
Investors need to decide whether Compass’s structural advantages and long runway justify paying up for the stock, or whether they would rather wait for a deeper pullback.
Business Drivers: Where Growth Is Coming From
The core of the Compass story hasn’t changed much – and that’s exactly the point.
Structural outsourcing trend
Compass continues to benefit from the long-term shift from in-house catering to outsourced solutions in workplaces, hospitals, universities and remote sites. Management estimates that first-time outsourcing accounts for around 45% of gross new business wins, and RBC believes this engine still has years to run. Investing
North America still in the spotlight
North America accounts for roughly 80% of group EBIT and remains the key growth driver: Investing
- FY25 organic revenue growth of 9.1% in North America
- Strong demand for office catering and workplace dining, including contracts at flagship corporate campuses
- Broad-based growth across sectors (Business & Industry, Education, Healthcare & Seniors, Sports & Leisure, and Defence/Remote)
Pricing normalisation vs. volume growth
With inflation fading, Compass will no longer get the same revenue “lift” from price increases. But that is partly offset by:
- Improving volume growth as more employees return to offices
- Ongoing shift to outsourcing, especially in mid-market and smaller customers
- Mix shift toward higher-value concepts and premium offerings such as those provided by Vermaat
The net result is a company still guiding to high-single-digit organic growth over time, but with less headline inflation noise and more emphasis on volumes and mix.
Risks: What Could Go Wrong?
Even bullish analysts acknowledge several key risks:
- Execution and integration risk
Large M&A programmes can go awry. Compass is absorbing Vermaat and other deals, and while management cites integration “ahead of expectations”, any misstep could weigh on margins. Compass Group Corporate Website - Leverage and liquidity
MarketBeat flags a relatively high debt-to-equity ratio and a current ratio below 1x, suggesting that Compass doesn’t carry a large liquidity buffer. MarketBeat While this is common in stable cash-generative businesses, it becomes a risk if a severe downturn or acquisition misstep hits cash flows. - Economic and employment cycles
A material slowdown in white-collar employment or office attendance would hurt its Business & Industry segment, which accounts for close to 40% of sales. Investing - Technological and behavioural shifts
- AI could, in the very long term, alter office work patterns again – although RBC currently sees AI-related clients as a growth driver rather than a threat. Investing
- GLP-1 weight-loss drugs could, in theory, dampen food volumes, though analysts argue this is likely to be mitigated by pricing and menu adaptation. Investing
- Competition
Rivals like Aramark and Sodexo are also chasing outsourcing opportunities. Reuters notes that Aramark has given an upbeat 2026 outlook despite a recent revenue miss, while Sodexo has flagged slower growth due to contract losses and competitive pressures in the U.S. Reuters
Competitive intensity is unlikely to vanish, even if Compass currently looks better positioned than some peers.
Is Compass Group PLC Stock a Buy Now?
For investors looking at Compass Group on 1 December 2025, the investment case can be summarised in three broad points:
- Fundamentals remain strong
- Double-digit profit growth in FY25
- Healthy cash generation and a growing dividend
- A clear 2026 plan for further profit growth and margin expansion Compass Group Corporate Website
- Sentiment is turning more positive
- Multiple upgrades in November, culminating in RBC’s move to “outperform” and a higher target on 1 December
- Consensus “Buy/Moderate Buy” ratings with mid-teens to mid-20s percentage upside to average price targets Investing
- Valuation is no longer excessive, but still not cheap
- The stock trades near the low end of its 12-month range and at a discount to recent highs
- On the other hand, it still commands a premium multiple versus the wider UK market and carries balance-sheet and macro risks
For long-term investors comfortable with the contract catering space, Compass increasingly resembles a “quality compounder on sale” rather than a growth story that’s run its course. For more valuation-sensitive or risk-averse investors, waiting for either a deeper market correction or additional evidence that FY26 guidance is conservative rather than heroic may be the smarter move.
Either way, Compass Group PLC has clearly re-entered the conversation in late 2025 as one of the FTSE 100’s more interesting mis-priced quality stories, rather than just a sleepy catering stock.
