September 12, 2024
Top 10 Stock Compass Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Compass – Top 10 Stock in FTSE 100 Index
Compass is listed as a top 10 stock on September 12, 2024 in the market index FTSE 100 because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 71 (high 71% performer), Obermatt assesses an overall buy recommendation for Compass on September 12, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Restaurants |
| Index | FTSE All Shares, FTSE 100, FTSE 350 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Compass Buy
| 360 METRICS | September 12, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 14 |
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| GROWTH | ||||||||
| GROWTH | 58 |
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| SAFETY | ||||||||
| SAFETY | 73 |
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| SENTIMENT | ||||||||
| SENTIMENT | 80 |
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| 360° VIEW | ||||||||
| 360° VIEW | 71 |
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ANALYSIS: With an Obermatt 360° View of 71 (better than 71% compared with alternatives), overall professional sentiment and financial characteristics for the stock Compass are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Compass. The consolidated Growth Rank has a good rank of 58, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 58% of competitors in the same industry. The consolidated Safety Rank at 73 means that the company has a financing structure that is safer than 73% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 80, which means that professional investors are more optimistic about the stock than for 80% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 14, meaning that the share price of Compass is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 86% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 71, Compass is better positioned than 71% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 58), a safe financing structure (Safety Rank of 73), and positive professional market sentiment (Sentiment Rank of 80), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Compass compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (58% better than peers). The value rank could be the reverse reflection of that (42%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Compass very positive
ANALYSIS: With an Obermatt Sentiment Rank of 80 (better than 80% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Compass is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Compass. Analyst Opinions are at a rank of 36 (worse than 64% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 54, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Compass. Even better, the Professional Investors rank is 88, meaning that professional investors hold more stock in this company than in 88% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 81, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 81% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 80 (more positive than 80% compared with investment alternatives), Compass has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Compass Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 14 (worse than 86% compared with alternatives), Compass shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Compass. Price-to-Sales is 45 which means that the stock price compared with what market professionals expect for future profits is higher than 55% of comparable companies, indicating a low value concerning Compass's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 7, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Compass. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 9 and Dividend Yield, which is lower than 58% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 14, is a sell recommendation based on Compass's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Compass? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Compass? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Compass may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Compass Growth Momentum good
| GROWTH METRICS | September 12, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 45 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 42 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 52 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 74 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 58 |
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ANALYSIS: With an Obermatt Growth Rank of 58 (better than 58% compared with alternatives), Compass shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Compass. Capital Growth has a rank of 52, which means that currently professionals expect the company to grow its invested capital more than 42% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 74 (above 74% of alternative investments). But Sales Growth has only a rank of 45, which means that, currently, professionals expect the company to grow less than 55% of its competitors, and Profit Growth is also low at a rank of 42. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 58, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Compass, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Compass Debt Financing Safety above-average
| SAFETY METRICS | September 12, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 57 |
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| REFINANCING | ||||||||
| REFINANCING | 46 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 84 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 73 |
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ANALYSIS: With an Obermatt Safety Rank of 73 (better than 73% compared with alternatives), the company Compass has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Compass is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Compass. Leverage is at a rank of 57, meaning the company has a below-average debt-to-equity ratio. It has less debt than 57% of its competitors. Liquidity is also good at a rank of 84, meaning the company generates more profit to service its debt than 84% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 46, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 54% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 73 (better than 73% compared with alternatives), Compass has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Compass. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Compass Below-Average Financial Performance
| COMBINED PERFORMANCE | September 12, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 14 |
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| GROWTH | ||||||||
| GROWTH | 58 |
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| SAFETY | ||||||||
| SAFETY | 84 |
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| COMBINED | ||||||||
| COMBINED | 46 |
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ANALYSIS: With an Obermatt Combined Rank of 46 (worse than 54% compared with investment alternatives), Compass (Restaurants, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Compass are low in value (priced high) with a consolidated Value Rank of 14 (worse than 86% of alternatives). But they show above-average growth (Growth Rank of 58) and are safely financed (Safety Rank of 73, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 46, is a hold recommendation based on Compass's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Compass exhibits low value (Obermatt Value Rank of 14), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 58). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 73) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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