Equities Update: IAG, Compass Group, Greggs, Vodafone…

IAG profits rise but caution prevails on geopolitical conflict

 
Adam Vettese, market analyst for eToro, says: “IAG’s Q1 results show the strength of its premium-focused model in a seasonally soft quarter. Operating profit jumped 77% to €351m, lifting the margin to 4.9%, on resilient premium yields, higher load factors and a standout performance from the high-margin loyalty business.

“Cost control was impressive and the balance sheet remains a fortress, with net leverage at just 0.5 times EBITDA, giving scope for further shareholder returns.
“However, management struck a more cautious tone for the full year, trimming free cash-flow guidance amid Middle East disruption and higher fuel costs while moderating near-term capacity growth.
 

Compass serves up strong growth despite AI workplace concerns

Mark Crouch, market analyst for eToro, says:“Compass Group’s latest results underline why the catering giant continues to command a premium valuation in the FTSE 100. At a time when many firms are grappling with weaker consumer demand and economic uncertainty, Compass is still producing a dependable mix of growth, rising margins and strong cash generation. The figures also challenge the narrative that hybrid working and advances in AI will materially weaken demand for workplace catering.

“The standout metric was the surge in new contract wins, up 14% to $4.1 billion, with roughly half coming from organisations outsourcing food services for the first time. That points to a structural shift rather than a short-term boost, particularly as businesses continue looking for ways to cut costs and improve efficiency. Strong client retention of 96% also suggests Compass is deepening relationships with existing customers while continuing to win market share globally.

“However, investors will still keep a close eye on inflation risks, particularly if escalating conflict in the Middle East drives another spike in energy and food prices, which could eventually squeeze margins across the sector.”

“Sentiment seems to have been led by this caution in early trading, with shares opening more than 3% lower.”
 

Greggs introduces menu revamp to revive momentum

 
Mark Crouch, market analyst for eToro, says:“After shares lost roughly half their value between late 2024 and 2025, investors have been looking for signs that Greggs can steady both trading momentum and sentiment. This update goes some way towards doing that, with improving like-for-like sales, solid cost control and management sticking to full-year guidance despite an increasingly fragile consumer backdrop.

“What stands out is Greggs’ attempt to evolve the brand without losing the value-led identity that made it a British high street success story in the first place. New products such as chicken rolls, matcha drinks and protein-focused salads are clearly designed to attract younger consumers and broaden lunchtime appeal beyond the traditional pastry customer. The risk, however, is whether Greggs drifts too far from the simple, affordable formula that built its loyal customer base.

“Greggs has sensibly locked in a large proportion of energy and commodity costs, but management’s warning over escalating Middle East tensions highlights how quickly fuel, transport and food prices could rise again. If inflationary pressures intensify into 2027, preserving margins while keeping prices attractive for cost-conscious consumers may become a far tougher balancing act.”
 

Investors hang up on Vodafone despite robust earnings

 
Adam Vettese, market analyst for eToro, says:“Vodafone’s full year numbers were, on the face of it, a solid delivery, EBITDAaL came in at the top end of guidance and forecasts were upgraded, so the headline print was hard to fault. Yet the 4% share price drop tells its own story. After a near 70% rally over the past twelve months, the market had already priced in execution. Today’s results, while reassuring, weren’t the blowout beat needed to justify chasing the stock higher.

“Germany showed tentative signs of recovery, Africa remains a genuine bright spot, and the Three UK integration is tracking well. However, the debt pile at close to €26 billion and the margin pressure from surging depreciation post-merger are impossible to ignore. When adjusted metrics are doing the heavy lifting and reported earnings are falling, investors will start to notice.

“The investment case remains intact; this is a recovery story becoming a growth story but much of the easy money has been made. At these levels, patience and selectivity are the watchwords.”