Highlights

  • In 2025, group organic revenue of CPG grew 8.7%, with North America at 9.1% and International at 7.7%; net new business increased 4.5% and client retention exceeded 96%.
  • Underlying operating profit rose 11.7% to over USD 3.3bn in 2025, with H2 2025 margin at 7.3%.
  • Outlook expects 2026 underlying operating profit growth around 10% from 7.0% organic revenue, 2% M&A contribution, and margin gains.

Compass Group plc (LSE:CPG) sits at 2,356.00 GBX after a 13.76% year-on-year drop. Operational numbers tell a different story from the share price. Jefferies sees enough to slap a Buy rating with a GBX 5,200 target. Investors face a choice: ignore the lag or position for the rebound.

Jefferies' call jumps out amid the flat trading. The target implies over 120% upside from current levels. Compass delivered 8.7% organic revenue growth in 2025, with North America at 9.1% and International at 7.7%. Net new business hit 4.5%, client retention topped 96%, and secured contracts reached USD 3.8bn – up 11%.

Numbers Scream Opportunity

Underlying operating profit climbed 11.7% to USD 3.3bn, H2 margins hit 7.3%, and free cash flow generated USD 2.0bn at 88% conversion. Capex ate USD 1.5bn (3.3% of revenue), M&A took USD 1.3bn. Statutory revenue rose 9.7%, operating profit 14.7% to USD 2,964m despite acquisition charges.

Three points demand attention:

  • Organic revenue expanded 8.7% across regions, with USD 3.8bn new business and 96% retention locking in recurring flows.
  • Profit jumped 11.7% to USD 3.3bn on margin gains to 7.3%, backed by USD 2.0bn cash conversion.
  • M&A pipeline includes Vermaat at €1.5bn (USD 1.8bn), expanding a USD 360bn addressable market.

M&A Fuels the Engine

Compass Group agreed to acquire Vermaat, a European premium food services business, for c.€1.5bn (USD 1.8bn). Integration of recent acquisitions progressed ahead of schedule, contributing to profit. These steps expand the total addressable market to c.USD 360bn through added capabilities.

The business model leverages sectorisation with global scale. M&A follows a track record in North America and extends to Europe for long-term opportunities.

CEO Lays Out the Path

Dominic Blakemore, Group Chief Executive, noted 2025 underlying operating profit growth of nearly 12% on a constant-currency basis. Both regions performed with net new business in the 4-5% range for four years.

 

Investments in Europe acquisitions like Vermaat aim to enhance on-site concepts and retail solutions. Disposal programme completion allows acquisitions to support profit growth. The market opportunity expands with new capabilities.

For 2026, expectations include underlying operating profit growth of around 10%, driven by 7.0% organic revenue, 2% from M&A including Vermaat, and margin progression. Longer-term guidance targets mid-to-high single-digit organic revenue growth and profit expansion ahead of revenue.

Jefferies Buy at GBX 5,200 signals the market misses the setup. Revenue grows, profits accelerate, cash flows, M&A deploys – all while shares drift.