COMPASS is the perfect choice for those fearful of contagion from the Greek crisis. Its Rest of the World Division saw EBIT increase 45 per cent to £87m, while the UK and Ireland, which saw revenues drop six per cent, account for just 12 per cent of total revenue.
With just a seven per cent market share in the outsourced global foodservice market, worth an estimated £100bn, there is plenty of room for growth. Compass itself expects organic revenue growth of six per cent, and its operating margins are continuing to see improvement – 50 basis points to seven per cent in the first half. Management believes this could be expanded to 8.5 per cent – which will boost earnings. Its balance sheet with net debt of £766m and 12 times interest cover, means it can comfortably accelerate its growth through acquisitions or reward shareholders with buybacks and dividend hikes. The 14 per cent interim hike is just a taster.
Yet, the shares are trading at 14.1 times September 2011 earnings – a significant discount to global rival Sodexo which trades on 16.3 times. Compass is a cheap way to wait out the Greek storm.