Compass COMP is scheduled to report its fourth-quarter 2024 results on Feb. 18.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

For the fourth quarter of 2024, COMP expects total revenues in the range of $1.225-$1.325 billion.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.28 billion, indicating a 16.65% increase from the figure reported in the year-ago quarter.

The consensus mark is pegged at a loss of 10 cents per share, which remained unchanged over the past 90 days. The figure suggests a 41.18% surge from the year-ago reported figure.

COMP surpassed the Zacks Consensus Estimate for earnings in two of the trailing four quarters, missed once and matched once, with an average positive surprise of 91.25%.

Let us see how things are shaping up for the upcoming announcement.

Factors to Consider

Compass recently integrated all seven of the fully owned Title and Escrow (T&E) operations into their Compass platform. More real estate transactions utilizing the in-house T&E services in the fourth quarter are expected to have generated additional service-based revenues, positively impacting the top line in the fourth quarter. T&E is a high-margin offering and the increased attach rate resulting from the full integration of all seven operations is likely to have positively impacted the bottom line in the quarter under review.

Compass has made efforts to reduce its cost in serving agents by distributing the costs of its platform investments across a large agent base. The company had more than 33,000 agents at the end of the third quarter, which will continue to allow them to amplify the effects of their platform with the new tools they rolled out. In the third quarter, the company launched the Compass Reverse Prospecting tool that enables agents and their homeowners to identify which of the 33,000 agents and their buyers have responded positively to their listing. Using the insights, the agents can make strategic decisions to move efficiently to a successful closing. The effects of this new launch are likely to be seen in the fourth quarter. Transactions are expected to have increased, leading to higher revenue in the to-be-reported quarter as agents identify and engage with serious buyers fast.

Compass also launched the Make Me Sell tool. Since its launch, the company had approximately 5,000 entries by December. The tool allows homeowners to set a target price that would convince them to sell. Then the listing becomes visible to Compass agents and potential buyers, who can make offers. This might have resulted in creating incremental inventory and transactions in the fourth quarter that would not have been possible otherwise. There have been many transactions in the fourth quarter that came from Make Me Sell, which is likely to have positively impacted the revenue in the quarter under review.

Compass experiences significant financial effects due to seasonality in the fourth quarter of each year, when the real estate market declines and revenues are typically lower. The company expects to have negative free cash flow in the to-be-reported quarter, which is likely to have put pressure on the bottom line in the fourth quarter. Per past trends, the top line is expected to have taken a hit in the to-be-reported quarter.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not exactly the case here.

Compass currently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Six Flags Entertainment Corporation FUN currently has an Earnings ESP of +9.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

FUN shares have jumped 3.8% in the trailing 12 months. It is set to report its fourth-quarter 2024 results on Feb. 27.

Life Time Group Holdings LTH currently has an Earnings ESP of +14.29% and sports a Zacks Rank #1.

LTH shares have skyrocketed 147.2% in the trailing 12 months. Life Time Group Holdings is slated to report its fourth-quarter 2024 results on Feb. 27.

Rush Street Interactive RSI has an Earnings ESP of +22.22% and sports a Zacks Rank #1 at present.

RSI shares have jumped 171.8% in the trailing 12 months. Rust Street Interactive is scheduled to report its fourth-quarter 2024 results on Feb. 26.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Six Flags Entertainment Corporation (FUN) : Free Stock Analysis Report

Compass, Inc. (COMP) : Free Stock Analysis Report

Rush Street Interactive, Inc. (RSI) : Free Stock Analysis Report

Life Time Group Holdings, Inc. (LTH) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research