Cash flow is the life and death blood flow of any business. If there’s enough, all is well. If there isn’t, well, then no other metric matters because it’s only a matter of time until you can’t pay your bills and you go out of business. Compass (NYSE:COMP) shot up over 35% at the time of writing, thanks to the revelation that its cash flow was doing much better than it used to.
Compass already has one major problem in that its focus is on real estate at a time when real estate is in such a state of flux that no one knows what will happen. Yet, it’s also making it clear that its conditions are improving even as the rest of the market is in chaos. Compass noted that it’s well on its way to being free cash flow positive both in the second quarter of this year and for the entire year as well. While the numbers suggested some weakness—its free cash flow came in at -$59 million for the first quarter—there was also clear improvement as its free cash flow in the first quarter of 2022 was -$131.8 million.
Compass made moves to cut costs that seemed to have worked quite well, and it’s also been improving its market share. While the total market is in decline, it’s increased its share to 4.5%, 17 basis points higher than previously seen.
Meanwhile, analysts are generally in favor of Compass stock. Currently, Compass stock is considered a Moderate Buy, thanks to four Buy ratings and three Holds. However, it only offers very limited upside potential, at just 0.53%, thanks to its average price target of $3.80 per share.
