Does Compass Stock Still Have Room to Grow After Recent 30% Jump in 2025?

Thinking about what to do with Compass stock? You are not alone. After all, Compass has been on quite a journey lately, and that has gotten more investors asking whether it is undervalued, overhyped, or sitting right where it should be. This past year alone, Compass’s share price has climbed an impressive 24.0%, building on a whopping 155.1% gain over the last three years. Of course, the road has not been smooth. More recently, Compass gave up 5.0% over the past week and is down 15.5% for the month. But since the start of the year, the stock is still up by a solid 30.2%.

What is behind these swings? Some of the recent movement comes as markets adjust to shifting views on the real estate sector and changing risk appetite. There have not been big headline events driving daily swings, but investors seem to be toggling between optimism about Compass’s long-term growth prospects and concern about overall market uncertainty. These dips and jumps make Compass an intriguing candidate for a closer look at value. Is the market mispricing what the company could actually be worth?

Based on common valuation checks, Compass scores a 3 out of 6, meaning it appears undervalued in half of the categories most investors use to spot bargains. But are those valuation measures giving us the full picture? Next, we will break down the classic ways analysts judge value, and then dig into an even sharper way to cut through the noise, so you will know where Compass stands from every angle.

Compass delivered 24.0% returns over the last year. See how this stacks up to the rest of the Real Estate industry.

Approach 1: Compass Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by forecasting its future cash flows and then discounting those expected amounts back to today’s dollars, using a reasonable rate to account for risk and time value. This approach aims to answer what Compass is truly worth if you added up all the cash it might generate for investors into the future.

For Compass, the most recent reported Free Cash Flow (FCF) was $139.4 million. Analyst estimates point to steady increases ahead, with projections reaching $313.9 million by 2026. Over the next ten years, Simply Wall St takes those analyst projections and extrapolates them further, estimating that Compass’s FCF could grow to over $1.09 billion by 2035. Each year's projection is gradually discounted back to reflect risk and uncertainty.

Putting it all together, the DCF model calculates an intrinsic value of $23.60 per share for Compass. With the current share price sitting at a 68.0% discount to this estimated value, the implication is that Compass stock is substantially undervalued based on its long-term cash flow potential.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Compass.

Our Discounted Cash Flow (DCF) analysis suggests Compass is undervalued by 68.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Compass Price vs Sales

The Price-to-Sales (P/S) ratio is an especially relevant valuation measure for companies like Compass, which may not report consistent profits but still generate substantial revenues. By comparing a company's current market value to its annual sales, the P/S ratio gives investors a quick way to assess how much they are paying for each dollar of revenue. For firms still scaling up or reinvesting heavily, P/S can reveal hidden value that other ratios might miss.

Growth expectations, profit margins, and business risks all play into what makes a “fair” P/S ratio. A company with higher anticipated growth or stronger margins typically justifies paying a higher multiple, while greater risk could warrant a lower ratio. For Compass, the current P/S ratio stands at 0.67x, which is not only below the real estate industry average of 2.92x but also just above the peer average of 0.59x.

Simply Wall St’s proprietary “Fair Ratio” refines the usual comparison methods by factoring in Compass’s growth prospects, risk profile, profit margin, industry trends, and market cap. In this case, the Fair Ratio for Compass is 0.67x, precisely matching the current multiple and suggesting the stock is valued in line with its fundamentals. This approach delivers a sharper, more nuanced perspective than simply comparing to industry numbers or peer groups because it focuses on what Compass should trade at given its unique characteristics.

Result: ABOUT RIGHT

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Compass Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a dynamic approach that helps you connect the story behind Compass with its financial forecast and fair value.

A Narrative is your own view or “story” about a company, where you enter your assumptions about its future revenue, earnings, and margins, and the platform instantly translates these into a Fair Value estimate, linking what you believe could happen to what the company might actually be worth.

Unlike static valuation models, Narratives let you easily test scenarios and update your outlook any time fresh news or earnings are released, so your estimate always reflects the latest information.

Narratives are featured front and center on the Simply Wall St Community page, empowering millions of investors to share and compare Fair Value estimates. This makes it much easier to decide if you should buy, hold, or sell by seeing where your view stacks up against the current price.

For example, among the community’s Narratives for Compass, some investors are highly optimistic, forecasting strong AI-driven growth and acquisition synergies that justify price targets of $11, while others are more cautious due to regulatory and industry pressures, setting targets as low as $7. This illustrates how powerful it is to visualize and understand everyone’s perspective at a glance.

Do you think there's more to the story for Compass? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com