Numis reiterates 'hold' rating for Compass

Numis reiterated a ‘hold’ rating and target price of 1,150p for Compass after the food service company reported its first half results.

Compass said underlying revenue grew 5.8% to £9.7bn in the six months to 31 March driven by a strong performance in North America.

Increased sales in Europe and the Rest of the World were partly offset by ongoing weakness in Australia, Brazil and Offshore & Remote divisions.

The FTSE 100 firm posted two profit figures - one before, and one after the restructuring which was announced last July.

Compass said its operating profit before restructuring grew 6.4% to £735m, with an operating margin of 7.5%.

After restructuring, operating profit grew 4.8% to £724m, with an operating margin of 7.4%.

“We are encouraged by the strong start to the year and in our view, Compass is a very high quality business and we share management’s view that there are promising structural growth opportunities globally with potential for further revenue and margin growth,” said Numis “However, we believe that this promise is captured in the FY16 PE ratio of 21.3x.”

Shares rose 1.66% to 1,283p at 0956 BST.