COMP · Compass
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $13.02
Note written ·
Price against the kill line
21.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $13.02, on record since 11 November 2026. The shares are down 17.6% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $13.02, the 14 August 2026 close, which would show the shares leading the S&P 500 again. A Q4 2026 adjusted EBITDA result above the $130 million top of the company's guide would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Real Estate
Quarter to 30 September 2026, filed 6 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 3,897
- Revenue, change on a year (%)
- +111.1
- Operating margin (%)
- 2.2
- Free cash flow, four quarters ($M)
- 294
- Net cash, cash less debt ($M)
- −2,300
- Price to earnings (×)
- 58.7
- Enterprise value to sales (×)
- 0.8
- Free-cash-flow yield (%)
- 3.8
All filed numbers
What Compass reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 3,897 | +111.1 | 2.2 |
| first filed | 4,306 | +109.0 | 2.9 |
| first filed | 2,704 | +99.4 | −13.0 |
| first filed | 1,700 | +23.1 | −2.5 |
| first filed restated | 1,846 | +23.6 | −0.3 |
| first filed | 2,060 | +21.1 | 1.9 |
| Pre-tax income ($M) | 53.0 |
| Net income ($M) four quarters: 133 | 62.0 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +52.4 |
| Operating cash flow ($M) | 327 |
| Capital spending ($M) | 33.1 |
| Free cash flow ($M) | 294 |
| Cash and short-term investments ($M) | 841 |
| Debt ($M) long-term debt | 3,141 |
| Net cash, cash less debt ($M) | −2,300 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 201 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 3,139 |
| Market value ($M) | 7,830 |
| Enterprise value, market value plus net debt ($M) | 10,130 |
| Enterprise value to sales (×) | 0.8 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | 58.7 |
| Price to book value (×) | 2.5 |
| Free-cash-flow yield (%) | 3.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 7.5% of shares outstanding sold short, 3.5 days of average trading to cover, +6.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $1.0M |
| 12 monthsfrom | $0 | $4.7M |
The thesis
Compass, Inc. is more likely to lag the S&P 500 over the next three months. The company guided fourth-quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to $100–130 million on 5 November 2026, and its chief executive said housing "has softened over the past few weeks". The Q4 2026 report, expected in early 2027, settles whether the Anywhere cost savings can hold earnings up as volume weakens.
Compass reported Q3 2026 revenue of $3.90 billion and adjusted EBITDA of $306 million, a 7.9% margin, against $94 million in Q3 2025, per its 5 November 2026 earnings release. Q4 revenue guidance of $3.150–3.350 billion compares with a $3.426 billion analyst estimate cited by Benzinga on 5 November 2026.
The shares closed at $10.26 on 11 November 2026, down 23.1% over three months from the $13.35 close of 13 August 2026. That price already reflects a weak Q4: the guide was public by the 6 November 2026 session, and the shares closed at $10.21 that day.
My view is that cost cuts will not fully offset lower transaction counts in the winter quarter. A Q4 adjusted EBITDA result above $130 million would show that view wrong.
Bullish and bearish views on Compass, Inc.
The bull case on Compass, Inc. (COMP), in brief: Q3 earnings were strong. The bear case: Q4 guidance is far below Q3.
Bull case
- Q3 earnings were strong. Adjusted EBITDA was $306 million against $94 million in Q3 2025, and revenue rose 11.6% against pro forma revenue of $3.49 billion, per the 5 November 2026 release. Pro forma means as if Anywhere had been owned in both periods.
- Compass outgrew the market on volume. Organic brokerage gross transaction value (GTV) rose 7.5% pro forma to $133.1 billion in Q3, against a 0.7% gain for the US residential market, per the 5 November 2026 release.
- Cost guidance moved down. Compass lowered its 2026 non-GAAP operating expense forecast to $2.71–2.73 billion from $2.75–2.80 billion on 5 November 2026.
- The balance sheet improved. Net debt was 2.7 times adjusted EBITDA at quarter end, down from 4.4 times when the Anywhere deal was announced, with cash of $841 million and an undrawn revolver, per the 5 November 2026 release.
- Several analysts still rate it Buy. Barclays kept Overweight with a $14 target on 6 November 2026. BTIG and StoneX kept Buy with $13 targets the same day, per Benzinga.
Bear case
- Q4 guidance is far below Q3. Adjusted EBITDA guidance of $100–130 million compares with $306 million reported for Q3, and revenue guidance sits below the $3.426 billion estimate cited by Benzinga on 5 November 2026.
- Management flagged a softer market. CEO Robert Reffkin said in the 5 November 2026 release that the housing market "has softened over the past few weeks". Organic brokerage transactions fell 0.3% pro forma in Q3, and organic franchise transactions fell 3.6%.
- Price targets are being cut. Wells Fargo kept Equal-Weight and lowered its target to $9 from $10 on 6 November 2026, below the $10.26 close of 11 November 2026. Barclays also lowered its target, to $14, the same day.
- Debt is still large. Long-term debt was $3.14 billion at the end of Q3 2026, per the company's release.
- Legal overhang is building. A securities fraud class action against Compass was reported on 27 October 2026. The company also faces listing-service antitrust litigation, and a New York Attorney General antitrust probe disclosed in June 2026 had no reported resolution at the last check.
Price setup
The shares closed at $10.26 on 11 November 2026, above the 50-day average of $9.71 and the 200-day average of $9.78. Daily closes have swung widely since the report: $10.04 on 4 November 2026, $9.22 on 5 November 2026, $10.21 on 6 November 2026, $10.79 on 9 November 2026 and $9.99 on 10 November 2026.
The 52-week high is $13.96 (intraday, 26 January 2026), and the last close is 26.5% below it. The 52-week closing low is $6.68, set on 7 April 2026. The three-month change of −23.1% reflects the slide from the $13.35 close on 13 August 2026.
Analyst targets bracket the price. Wells Fargo's $9 is below it, and the $13 targets from BTIG and StoneX and Barclays' $14 are above it.
SEC Form 4 filings show option exercises by three officers on 15 September 2026, with shares withheld for tax at $10.65, and a director's exercise of 2,419 shares on 2 November 2026. The filings list no open-market sales.
Catalysts ahead
- ~20 November 2026 (est.): NAR October existing-home sales. Shows whether the market softening Compass described on 5 November 2026 appears in national closings.
- ~February 2027 (est.): Compass Q4 2026 results. Tests whether adjusted EBITDA lands inside the $100–130 million guide as transaction volume weakens.
What would change the view
A daily close above $13.02, the 14 August 2026 close, which would show the shares leading the S&P 500 again. A Q4 2026 adjusted EBITDA result above the $130 million top of the company's guide would also show the shares leading.
What it trades with
Compass trades with US housing activity, mortgage-rate moves and other brokerage and portal names. NAR existing-home sales are the cleanest outside read on its closings. The Anywhere acquisition, completed 9 January 2026, inflates reported year-over-year growth, so pro forma figures are the better comparison.
The evidence, claim by claim (7)
- Compass reported Q3 2026 revenue of $3.90 billion and adjusted EBITDA of $306 million (7.9% margin), against $94 million in Q3 2025. Compass Q3 2026 results, 8-K exhibit 99.1 · as of
- Compass guided Q4 2026 revenue to $3.150–3.350 billion and adjusted EBITDA to $100–130 million. Compass Q3 2026 results, 8-K exhibit 99.1 · as of
- Organic brokerage GTV rose 7.5% pro forma against a 0.7% gain for the US residential market; organic brokerage transactions fell 0.3% and organic franchise transactions fell 3.6%. Compass Q3 2026 results, 8-K exhibit 99.1 · as of
- Compass lowered 2026 non-GAAP operating expense guidance to $2.71–2.73 billion from $2.75–2.80 billion. Compass Q3 2026 results, 8-K exhibit 99.1 · as of
- Cash was $841 million with the revolver undrawn, long-term debt $3.14 billion, and net debt to adjusted EBITDA 2.7 times, down from 4.4 times at the Anywhere announcement. Compass Q3 2026 results, 8-K exhibit 99.1 · as of
- Wells Fargo kept Equal-Weight and lowered its price target to $9 from $10; Barclays kept Overweight and lowered its target to $14. Benzinga analyst ratings · as of
- CEO Robert Reffkin said the housing market 'has softened over the past few weeks'. Compass Q3 2026 results, 8-K exhibit 99.1 · as of
Sources
Related · shared themes
PRCH
Porch Group
Porch Group's insurance fees beat in Q3 2026 and lifted 2026 adjusted EBITDA guidance to $135-140M, and the shares hit a 52-week high on 10…
REZI
Resideo Technologies
Resideo Technologies is modestly more likely than not to beat the S&P 500 after a third-quarter beat in its first full quarter as a…
BETR
Better Home & Finance Holding
Better Home & Finance shares are more likely to lag the S&P 500 over three months: volume fell from $496 million in July to $345 million in…
SMRT
SmartRent
SmartRent's third-quarter results on 4 November 2026 showed a 41.2% gross margin and a fourth straight positive adjusted EBITDA quarter, so…