Compass shares gain increased market share, improved free cash flow

Shares of Compass rose last week after the money-losing home broker reported that it gained market share in the first quarter and took a bigger bite of a shrinking pie as a lack of homes for sale and increased interest rates slowed transactions.

Compass also said that free cash flow improved to negative $59 million in the first quarter from $131.8 million a year earlier, and that the company would have positive free cash flow from the second quarter. Compass shares gained 47% in the week and closed at $3.66 on Friday, bringing their gains to date to 56%.

The company reported a net loss of $0.33 per share, in line with the consensus forecast, according to analyst estimates compiled by Visible Alpha. Sales fell 31% to $957 million, while transactions fell 24 percent.

The company said it cut costs in the first quarter and increased its national market share to 4.5%, a gain of 17 basis points, even as the market contracted. The company said it processed nearly 36,000 transactions in the first quarter, down 24% from a year earlier, while transactions for the entire residential real estate market fell 26%.

“If the market improves going forward, we will be well positioned to generate significant long-term profits,” CEO Robert Refkin said during the company’s earnings call. “As the No. 1 real estate brokerage in the United States for the past two years by sales volume, we have built a highly sought-after business for attracting and retaining the best real estate agents in the industry.