Steady Recovery for Narrow-Moat Compass in Fourth Quarter

Narrow-moat Compass Group’s preclose update for full-year 2021 was certainly nothing to get carried away about, but it does represent progress at least. Revenue for the full year is expected to be around 76% of 2019 levels, with revenue in the fourth quarter of this year recovering to 86%. Similarly, operating margins are expected to be around 4.4% for the full year, improving to 5.75% in the fourth quarter. So, while revenue is coming back perhaps more slowly that some had anticipated, investors should take comfort that margins are rising ahead of this, closing the gap to prepandemic levels. We reiterate our GBX 1,560 fair value estimate and see modest upside from the prevailing share price.