QS Research · Michael Burry's Scion Capital analyst template · 2006
Compass, Inc. (COMP)
As of 2026-11-09 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -39% · upside +60%
The market is pricing Compass at 0.80x TTM EV/Sales and 33.2x EV/EBITDA, which is not cheap on operating earnings because TTM EBIT is -$182.4M while TTM net income of $133.5M leans on a $400M tax benefit. The post-Anywhere company has real scale and improving cash generation ($294.3M TTM free cash flow, Q3 2026 Adjusted EBITDA $306M, Net Debt/Adjusted EBITDA 2.7x), but leverage, dilution and litigation/antitrust overhang keep the equity from being a clean deep-value long. Using the current 0.80x EV/Sales gives a base case at today's price; a 0.63x EV/Sales downside on the same TTM revenue gives -38.6% after leases, while a 1.24x EV/Sales upside gives +59.6%, so the reward/risk is about 1.5:1, not enough for a long and too positive for a short. I would watch for the December 2026 litigation milestones, Q2 2027 note redemption and franchise platform rollout before committing capital.
Key numbers
- Share price: $10.21
- Market cap: $7.83B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $12.61B
- P/E (TTM): 58.7x
- Price / book: 2.49x
The 15 boxes
- ✓ 1. Long-form business notes
Compass makes money mainly by taking a share of gross sales commissions at its owned brokerage, while franchise royalties and integrated services were small contributors in 2025. The FY2021 10-K describes a U.S. technology-enabled residential brokerage; the FY2025 10-K describes a larger, multi-brand global real estate services company after the Jan 9, 2026 Anywhere merger. FY2025 revenue was $6.96B, operating loss $63.4M and operating cash flow $216.7M; revenue fell from $6.42B in FY2021 to $4.88B in FY2023 before recovering. Post-merger scale is more than 340,000 real estate professionals combined, but the 10-K says the Compass platform is still only for the Compass-brand owned brokerage.
- ✓ 2. Competitive advantage
Compass describes itself as competing on agent retention, franchisee retention, an integrated technology suite, growing scale and its brands, but the sources offer no metric (agent count, retention rate, market share, per-agent productivity) to prove any of that is durable. The industry is explicitly "highly competitive and fragmented" and lists internet-based brokerages, vertical SaaS vendors, enterprise technology bellwethers and real estate financial services as overlapping competitors. The return history shows no pricing power: operating income was negative in every year FY2020-FY2025, though the loss narrowed from -$589.4M (FY2022) to -$63.4M (FY2025) while revenue rose from $4.88B (FY2023) to $6.96B (FY2025) — cost scale, not a toll bridge. The main threat to the model is industry antitrust change to commissions and royalty splits, plus leverage taken on in the Anywhere Merger.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue was $3,897M versus $1,846M in Q3 2025 (+111.1%), but only +11.6% versus pro forma revenue of $3,493M, with organic (non-GAAP) revenue +7.4%; income from operations turned to $87M from $(6)M and Adjusted EBITDA rose to $306M (7.9% margin) from $94M (5.1%). The nine-month picture is weaker: an operating loss of $(140)M and net income of $176M that leans on a $400M tax benefit from reversing valuation allowances, with $245M of merger costs and $461M of D&A in the period. Cash was $841M at Sep 30, 2026 with no revolver draw against $3.14B of long-term debt, Q3 operating cash flow was $248M and free cash flow $240M, and Q4 2026 guidance is $3.150–3.350B of revenue and $100–130M of Adjusted EBITDA. The 10-Q states no material change to risk factors from the 2025 Form 10-K.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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