Compass Diversified Holdings (CODI) AI Stock Analysis

• Market Cap: $560.51M
• Dividend Yield: 13.62%
• Average Volume (3M): 1.03M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.29
• Revenue Growth: 6.77%
• EPS Growth: 9.95%
• Country: US
• Employees: 3,340
• Sector: Industrials
• Sector Strength: 78
• Industry: Conglomerates
• EPS (TTM): N/A
• Shares Outstanding: 75,235,970
• 10 Day Avg. Volume: 1,097,826
• 30 Day Avg. Volume: 1,028,520
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 7.82
• Enterprise Value/Revenue: 1.99
• Enterprise Value/Gross Profit: 4.30
• Enterprise Value/Ebitda: 12.75
• 1Y Price Target: $7.15
• Price Target Upside: -4.03% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2

• Rating: 58 Neutral
• Price Target: $7.00 ▼(-6.04% Downside)

Compass Diversified Holdings faces significant challenges due to financial irregularities at a subsidiary, impacting its financial stability and market sentiment. While the company offers a high dividend yield, its negative P/E ratio and technical indicators suggest caution. The firm's financial performance is stable but requires improvements in cash flow management and leverage reduction to enhance shareholder value.

Positive Factors

Capital Allocation

Analyst is encouraged by Compass's diverse portfolio, history of strong capital allocation, and internal execution evidenced by its generation of 19% unlevered rate of returns on investments.

Financial Leverage

Financial leverage declined to 3.6x (or 3.4x net of one-time charges), indicating the company is comfortably leveraged with ample flexibility to pursue incremental M&A on an opportunistic basis.

Revenue and EBITDA Growth

Revenue and EBITDA growth accelerated in 4Q to 14% and 29% y/y, respectively, which was well-ahead of initial expectations.

Negative Factors

Financial Restatement

CODI shares fell 62% after the company announced it would restate 2024 financial statements following an ongoing internal investigation that found irregularities in Lugano Holdings’ non-CODI financing, accounting, and inventory practices.

Lugano Investigation

The ongoing investigation at the Lugano subsidiary creates material uncertainty for CODI.

Valuation Uncertainty

The price target for CODI is based on a sum-of-the-parts evaluation, conservatively assigning zero value to Lugano.

Compass Diversified Holdings Business Overview & Revenue Model

Company Description

Compass Diversified Holdings (CODI) is a publicly traded investment firm that specializes in acquiring and managing a diverse portfolio of middle-market businesses across various sectors, including consumer products, industrial, and niche markets. The company focuses on building long-term value by investing in established companies with strong management teams and growth potential. Its core products and services range from consumer goods to industrial equipment, enabling CODI to leverage its operational expertise and capital resources to enhance profitability and drive sustainable growth.

How the Company Makes Money

Compass Diversified Holdings generates revenue primarily through the ownership and operation of its portfolio companies. The company earns income from dividends and distributions from these businesses, which are often structured to maximize shareholder returns. Additionally, CODI may benefit from capital appreciation as the value of its investments increases over time. The firm actively pursues strategic acquisitions and partnerships to expand its portfolio, which can lead to increased revenue streams. By focusing on businesses with strong cash flows and growth opportunities, CODI aims to deliver consistent returns to its investors.

Compass Diversified Holdings Financial Statement Overview

Summary

Compass Diversified Holdings shows strength in gross profitability and a balanced equity structure, but faces challenges with high leverage, low ROE, and negative cash flows. Revenue growth is modest, but the company's ability to improve net income and cash generation remains a key area for improvement.

Income Statement

The company shows a strong gross profit margin at 45.5% for 2024, indicating solid profitability from core operations. However, the net profit margin is low at 1.9%, reflecting challenges in translating revenue into net income. Revenue growth from 2023 to 2024 is modest at 6.8%, marked by fluctuating EBIT margins over recent years, currently at 10.5%.

Balance Sheet

With a debt-to-equity ratio of 1.37, the company has relatively high leverage, which could pose risks in volatile market conditions. The return on equity (ROE) is low at 3.3%, indicating limited profitability for shareholders. The equity ratio is reasonably healthy at 32.0%, suggesting a balanced capital structure.

Cash Flow

The company faces challenges with negative free cash flow of -$129.33 million in 2024, a decrease from positive figures in 2023. Operating cash flow to net income ratio is negative, indicating difficulties in converting net income into cash flow. These factors highlight concerns over sustainability of cash flows.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.20B	2.06B	2.01B	1.72B	1.45B
Gross Profit	1.00B	893.32M	783.05M	725.96M	539.67M
EBITDA	341.85M	230.09M	247.10M	193.13M	167.26M
Net Income	12.81M	246.29M	36.39M	114.55M	22.78M
Balance Sheet
Total Assets	4.05B	3.82B	3.85B	3.14B	2.60B
Cash, Cash Equivalents and Short-Term Investments	59.73M	450.48M	61.27M	157.13M	70.74M
Total Debt	1.77B	1.67B	1.83B	1.28B	899.46M
Total Liabilities	2.49B	2.30B	2.49B	1.86B	1.38B
Stockholders Equity	1.30B	1.33B	1.14B	1.11B	1.10B
Cash Flow
Free Cash Flow	-124.34M	22.30M	-92.56M	94.17M	117.86M
Operating Cash Flow	-67.64M	78.08M	-28.29M	134.05M	148.63M
Investing Cash Flow	-422.45M	570.50M	-626.73M	-317.50M	-700.83M
Financing Cash Flow	100.61M	-260.16M	556.88M	273.21M	521.73M

Compass Diversified Holdings Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 7.45
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CODI, the sentiment is Neutral. The current price of 7.45 is above the 20-day moving average (MA) of 6.78, above the 50-day MA of 6.55, and below the 200-day MA of 15.65, indicating a neutral trend. The MACD of 0.15 indicates Negative momentum. The RSI at 58.99 is Neutral, neither overbought nor oversold. The STOCH value of 83.84 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CODI.

Compass Diversified Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SPLP	71 Outperform	$813.90M	3.80	24.14%	―	5.83%	72.33%
Sector *	61 Neutral	C$7.19B	-4.76	-4.20%	2.32%	13.56%	-31.48%
MATW	61 Neutral	$746.68M	―	-12.81%	4.12%	-11.13%	-351.71%
CODI	58 Neutral	$560.51M	―	-4.98%	13.62%	6.77%	9.95%
TRC	48 Neutral	$469.57M	230.99	-0.11%	―	14.79%	-141.14%
FBYD	45 Neutral	$826.15M	90.52	635.79%	―	9.17%	-91.26%
FIP	44 Neutral	$544.37M	―	-9.32%	1.91%	16.07%	32.11%

Compass Diversified Holdings Corporate Events

Compass Diversified Extends Forbearance Agreement Amid Investigation

Compass Diversified Holdings, a company involved in managing a diverse portfolio of businesses, announced on July 28, 2025, that it has entered into a second forbearance agreement with its lenders, extending the forbearance period until October 24, 2025. This decision follows the identification of financial irregularities at its subsidiary, Lugano Holdings, Inc., which has led to a delay in filing its quarterly report and a need for financial restatements. The extended agreement increases the company’s revolving credit facility from $40 million to $60 million, ensuring liquidity while the investigation continues. The company remains focused on maintaining strong performance across its other subsidiaries, which are operating normally and generating significant cash flow.

The most recent analyst rating on (CODI) stock is a Buy with a $36.00 price target. To see the full list of analyst forecasts on Compass Diversified Holdings stock, see the CODI Stock Forecast page.

Compass Diversified Announces Quarterly Cash Distribution

On July 2, 2025, Compass Diversified Holdings announced a quarterly cash distribution for its Series A, B, and C Preferred Shares, covering the period from April 30, 2025, to July 30, 2025. This distribution highlights the company’s strong cash flow capabilities despite ongoing investigations, underscoring its robust business model and potential implications for stakeholders.

The most recent analyst rating on (CODI) stock is a Buy with a $36.00 price target. To see the full list of analyst forecasts on Compass Diversified Holdings stock, see the CODI Stock Forecast page.

Compass Diversified Probes Financial Irregularities at Subsidiary

On June 25, 2025, Compass Diversified Holdings announced non-reliance on its financial statements for 2022 and 2023 due to an ongoing investigation into its subsidiary, Lugano Holding, Inc. This follows a similar disclosure regarding 2024’s financial statements. The investigation, which has identified irregularities in Lugano’s financial practices, is progressing as expected, with CODI working to finalize necessary financial restatements. Despite these challenges, CODI’s other subsidiaries remain unaffected, continuing to operate normally with strong financial health. The company emphasizes its ample liquidity and commitment to maximizing long-term stakeholder value.

The most recent analyst rating on (CODI) stock is a Buy with a $36.00 price target. To see the full list of analyst forecasts on Compass Diversified Holdings stock, see the CODI Stock Forecast page.

Compass Diversified Holdings Director Resignation Announced

On June 7, 2025, Gordon M. Burns resigned as a director of Compass Diversified Holdings, effective immediately, following his earlier decision not to seek re-election due to other commitments. His resignation was not due to any disagreements with the company’s operations or policies. The Board plans to reduce its size from nine to eight directors and will not appoint a successor to Mr. Burns.

The most recent analyst rating on (CODI) stock is a Buy with a $36.00 price target. To see the full list of analyst forecasts on Compass Diversified Holdings stock, see the CODI Stock Forecast page.

Compass Diversified Holdings Stabilizes Amid Financial Irregularities

In response to financial irregularities discovered at its subsidiary Lugano Holding, Inc., Compass Diversified Holdings has taken several actions to stabilize its financial position. These include entering a forbearance agreement with lenders, reducing management fees, restricting investments in Lugano, and suspending quarterly cash distributions to shareholders. The company is also addressing compliance issues with the NYSE due to delayed financial filings, with efforts underway to rectify the situation and maintain its listing status.

The most recent analyst rating on (CODI) stock is a Buy with a $36.00 price target. To see the full list of analyst forecasts on Compass Diversified Holdings stock, see the CODI Stock Forecast page.