Investment Thesis
Compass demonstrates strong revenue growth of 23.7% YoY, but this is significantly undermined by severe operational unprofitability (-$351M operating loss, -13% margin), negative free cash flow (-$168M), and deteriorating liquidity (0.84x current ratio). The company cannot cover interest expenses (-9.5x coverage) and is dependent on cash reserves to sustain operations, creating elevated financial distress risk.
Strengths
- Strong revenue growth of 23.7% YoY indicates market traction and demand for services
- Adequate cash reserves of $484M provide a near-term liquidity buffer
- Positive net income of $22M despite operational challenges shows some path to profitability
Risks
- Large operating losses of -$351M with -13% operating margin indicate core business is unprofitable and burning cash
- Negative free cash flow of -$168M is unsustainable; cash runway of ~2.9 years at current burn rate
- Weak liquidity with current ratio of 0.84x and negative interest coverage of -9.5x creates refinancing and solvency risk
- High leverage with $3.1B debt exceeding $2.8B equity; minimal equity cushion for adverse scenarios
- Extremely weak returns (ROE 0.8%, ROA 0.3%) show poor capital efficiency despite scale
Key Metrics to Watch
- Operating cash flow trend and path to positive OCF
- Operating margin improvement toward breakeven or profitability
- Free cash flow sustainability and cash depletion timeline
- Current ratio and working capital position
- Interest coverage ratio and debt service capability
Financial Metrics
Revenue
2.7B
Net Income
22.0M
EPS (Diluted)
$0.03
Free Cash Flow
-168.0M
Total Assets
8.1B
Cash
484.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-13.0%
Net Margin
0.8%
ROE
0.8%
ROA
0.3%
FCF Margin
-6.2%
Balance Sheet & Liquidity
Current Ratio
0.84x
Quick Ratio
0.84x
Debt/Equity
1.11x
Debt/Assets
65.2%
Interest Coverage
-9.49x
Long-term Debt
3.1B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T08:15:22.829675 |
Data as of: 2026-03-31 |
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