Compass Gains 7.2% Despite Mixed Q1 Results

Shares of Compass (COMP) gained 7.2% in after-trading hours on Thursday despite mixed first-quarter results, as revenue surpassed estimates but earnings lagged. The real estate technology company empowers its residential real estate agents to deliver exceptional services through its end-to-end platform.

Results in Detail

Net loss per share came in at $0.45, greater than the Street’s estimates of a loss of $0.36. However, it compares favorably with a loss of $1.67 reported in the last year’s quarter.

Compass reported revenues of $1.4 billion, up 25.4% from the year-ago quarter. The same was above analysts’ estimates of $1.34 billion. The company’s agents were able to increase the market share to 5.8% over the last twelve months up from 4.3% in the same period last year.

Its agents closed 47,367 transactions, up 18% year-over-year. Also, Compass entered two new markets during the quarter, bringing the total markets served to 71 at the end of Q1.

Gross Transaction Value of $53.7 billion increased by 23% year-over-year on the back of strong transaction volume and higher average transaction value.

Compass CEO Robert Reffkin, said, “We see the current macro uncertainty as an opportunity for us to extend our technology lead over the rest of the industry, creating an even wider moat. Most importantly, we have significant capacity to reduce spending as necessary, while continuing to grow our business, improve our cash position and drive positive free cash flow in 2023.”

Outlook

For Q2, the company expects to report revenue in the range of $2 billion to $2.2 billion, compared with the consensus estimate of $2.4 billion. Also, full-year 2021 revenue is projected to be between $7.6 billion and $8 billion, compared with the Street’s expectations of $8.05 billion.

Analyst Recommendation

Overall, the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on two Buys and two Holds. The Compass average price forecast of $11.17 implies upside potential of about 149.9% from current levels.

Hedge Fund Trading Activity

TipRanks’ Hedge Fund Trading Activity tool shows that confidence of hedge funds in Compass is currently Neutral, as the cumulative change in holdings across all three hedge funds that were active in the last quarter was a decrease of 132,800 shares.

Conclusion

Shares of Compass have declined 53.2% so far this year. This may mark a decent entry point, supported by growing market share, rising revenues, and expanding agent base of the company.

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