Compass Diversified Holdings (CODI) AI Stock Analysis

• Market Cap: $480.76M
• Dividend Yield: 15.65%
• Average Volume (3M): 2.00M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.23
• Revenue Growth: 6.77%
• EPS Growth: 9.95%
• Country: US
• Employees: 3,340
• Sector: Industrials
• Sector Strength: 90
• Industry: Conglomerates
• EPS (TTM): 0.52
• Shares Outstanding: 75,235,970
• 10 Day Avg. Volume: 1,821,697
• 30 Day Avg. Volume: 2,001,825
• PEG Ratio: -0.06
• Price to Book (P/B): 1.34
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 29.98
• Enterprise Value/Market Cap: 3.71
• Enterprise Value/Revenue: 0.21
• Enterprise Value/Gross Profit: 1.75
• Enterprise Value/Ebitda: 1.81
• 1Y Price Target: $22.33
• Price Target Upside: 249.45% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 48 Neutral
• Price Target: $6.50 ▲(1.72%Upside)

The overall stock score is driven by significant corporate challenges, including financial irregularities and compliance issues, which overshadow stable financial performance and a high dividend yield. Technical indicators also reflect bearish trends, contributing to a cautious outlook.

Positive Factors

Financial Performance

Revenue and EBITDA growth accelerated significantly, outperforming initial expectations and underscoring strong financial performance.

Market Outlook

Management is confident in surpassing the target of $1 billion adjusted EBITDA, highlighting resilience and strategic growth plans.

Portfolio Strategy

Compass's diverse portfolio and history of strong capital allocation are evidenced by its impressive unlevered rate of return on investments.

Negative Factors

Corporate Governance

The investigation at the Lugano subsidiary and unauthorized funding arrangements introduce a significant level of uncertainty.

Earnings Uncertainty

The need to restate financials due to irregularities at Lugano creates uncertainty around consolidated valuation and earnings figures.

Investment Risks

Investors express concern over potential distribution cuts and elevated leverage, especially with Lugano representing a significant portion of adjusted EBITDA.

Compass Diversified Holdings Business Overview & Revenue Model

Company Description

Compass Diversified is a private equity firm specializing in add on acquisitions, buyouts, industry consolidation, recapitalization, late stage and middle market investments. It seeks to invest in niche industrial or branded consumer companies, manufacturing, distribution, consumer products, business services sector, safety & security, electronic components, food, foodservice. The firm prefers to invest in companies based in North America. It seeks to invest between $100 million and $800 million in companies with an EBITDA between $15 million to $80 million. It seeks to acquire controlling ownership interests in its portfolio companies and can make additional platform acquisitions. The firm prefer to have majority stake in companies. The firm invests through its balance sheet and typically holds investments between five to seven years. Compass Diversified was founded in 2005 and is based in Westport, Connecticut with an additional office in Costa Mesa, California.

How the Company Makes Money

Compass Diversified Holdings makes money primarily through the acquisition and management of a diverse set of middle-market businesses. Revenue is generated from the operating income of its subsidiary companies, which span across different sectors. CODI focuses on acquiring companies with strong cash flow characteristics and potential for growth. The firm actively manages these subsidiaries to improve operational efficiency and profitability, and it may also benefit from capital appreciation when these businesses are eventually sold. Additionally, CODI receives management fees and potential dividends from its holdings, contributing to its earnings. The company's performance is also bolstered by leveraging strategic partnerships and maintaining a robust investment strategy to optimize the value of its portfolio.

Compass Diversified Holdings Financial Statement Overview

Summary

The company has a strong gross profit margin but faces challenges with high leverage, low ROE, and negative cash flows. Revenue growth is modest, and while financial health is stable, attention to leverage and cash flow management is needed to enhance shareholder value.

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
	EBIT
230.13M	90.07M	130.84M	123.08M	78.01M
	EBITDA
341.85M	230.09M	247.10M	193.13M	167.26M
	Net Income Common Stockholders
12.81M	246.29M	36.39M	114.55M	22.78M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
59.73M	450.48M	61.27M	157.13M	70.74M
	Total Assets
4.05B	3.82B	3.85B	3.14B	2.60B
	Total Debt
1.77B	1.67B	1.83B	1.28B	899.46M
	Net Debt
1.71B	1.22B	1.78B	1.13B	828.72M
	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: Negative
• Last Price: 6.39
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CODI, the sentiment is Negative. The current price of 6.39 is below the 20-day moving average (MA) of 7.07, below the 50-day MA of 11.99, and below the 200-day MA of 18.74, indicating a bearish trend. The MACD of -1.54 indicates Negative momentum. The RSI at 26.46 is Positive, neither overbought nor oversold. The STOCH value of 12.22 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CODI.

Compass Diversified Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	66 Neutral	$4.52B	12.34	5.41%	3.62%	4.15%	-12.18%
SPLP	63 Neutral	$793.79M	3.59	24.14%	―	5.83%	72.33%
FIP	58 Neutral	$702.34M	―	-6.42%	1.92%	5.70%	36.39%
MATW	52 Neutral	$714.44M	―	-17.17%	4.41%	-9.04%	-339.31%
CODI	48 Neutral	$480.76M	―	-4.98%	15.65%	6.77%	9.95%
TRC	47 Neutral	$441.12M	206.65	0.46%	―	7.04%	268.20%
FBYD	40 Underperform	$810.99M	4.49	635.79%	―	32.28%	-109.19%

Compass Diversified Holdings Corporate Events

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.

Compass Diversified Faces Financial Statement Irregularities

On May 7, 2025, Compass Diversified Holdings announced that it cannot rely on its financial statements for fiscal 2024 due to an ongoing internal investigation into its subsidiary, Lugano Holding, Inc. This investigation, which has identified irregularities in Lugano’s financing and accounting practices, led to the resignation of Lugano’s CEO, Moti Ferder, and the postponement of CODI’s 2025 annual stockholders meeting. The company has delayed its Q1 2025 earnings release and Form 10-Q filing to allow more time for the investigation. Despite these challenges, CODI’s leadership remains confident in the company’s management and is committed to protecting stakeholders and maximizing value.