Compass Diversified Holdings (CODI) AI Stock Analysis

• Market Cap: $594.36M
• Dividend Yield: 12.66%
• Average Volume (3M): 1.32M
• 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: 91
• Industry: Conglomerates
• EPS (TTM): N/A
• Shares Outstanding: 75,235,970
• 10 Day Avg. Volume: 3,158,434
• 30 Day Avg. Volume: 1,316,679
• PEG Ratio: -0.30
• Price to Book (P/B): 0.41
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -4.21
• Enterprise Value/Market Cap: 3.77
• Enterprise Value/Revenue: 0.27
• Enterprise Value/Gross Profit: 2.30
• Enterprise Value/Ebitda: 2.17
• 1Y Price Target: $27.80
• Price Target Upside: 251.90% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

Compass Diversified Holdings faces a mix of strengths and challenges. While it shows strong financial performance and strategic initiatives, high leverage and negative cash flows remain significant risks. Technical indicators are bearish, and valuation metrics are concerning, though the high dividend yield provides some balance. Recent corporate events, particularly financial irregularities, add further uncertainty.

Positive Factors

Earnings Growth

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

Portfolio Strength

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.

Strategic Focus

Compass is viewed favorably by potential sellers of businesses due to its ability to provide ongoing strategy support and its longer-term outlook and growth-oriented focus.

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.

Investor Concerns

Investors are concerned about Lugano representing 38% of 2024 adjusted EBITDA, risks associated with a potential cut to the annual distribution, and elevated leverage.

Market Risks

Trade uncertainty could pressure large orders in the niche industrials segment, while subsidiaries including Honey Pot and Sterno have exposure to mass channel retail.

Compass Diversified Holdings Business Overview & Revenue Model

Company Description

Compass Diversified Holdings (CODI) is a publicly traded investment firm that acquires and manages a diverse portfolio of profitable, middle-market businesses across a variety of sectors, including niche industrial, branded consumer, and other sectors. CODI aims to provide shareholders with consistent cash distributions and long-term value appreciation by actively managing its subsidiaries to enhance operational efficiencies and market competitiveness.

How the Company Makes Money

Compass Diversified Holdings makes money primarily through the acquisition, ownership, and management of a diverse portfolio of middle-market businesses. The company generates revenue by leveraging the operational performance of its subsidiaries, which operate across various sectors, including consumer and industrial markets. CODI earns income through dividends and distributions from these subsidiaries, as well as through capital appreciation realized upon the sale of its holdings. Additionally, the company may engage in strategic partnerships and agreements that enhance the market positioning and profitability of its portfolio companies, contributing to its overall earnings.

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. While revenue growth is present, the company's ability to improve net income and cash generation remains a key area for improvement. The firm's financial health is stable but requires attention to leverage and cash flow management 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	2.26B	1.84B	1.56B
	Gross Profit
1.00B	893.32M	907.74M	725.96M	562.78M
	EBIT
230.13M	90.07M	175.57M	139.50M	94.83M
	EBITDA
347.71M	236.13M	253.82M	249.70M	145.72M
	Net Income Common Stockholders
12.81M	246.29M	36.39M	24.86M	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: 7.90
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• 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 7.9 is below the 20-day moving average (MA) of 13.28, below the 50-day MA of 16.10, and below the 200-day MA of 19.86, indicating a bearish trend. The MACD of -2.71 indicates Positive momentum. The RSI at 23.03 is Positive, neither overbought nor oversold. The STOCH value of 15.45 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 *	64 Neutral	$4.44B	11.99	5.16%	249.23%	4.01%	-11.87%
CODI	58 Neutral	$594.36M	―	-4.98%	12.66%	6.77%	9.95%
SPLP	58 Neutral	$737.30M	3.44	24.14%	―	5.83%	72.33%
TRC	49 Neutral	$438.97M	204.89	0.46%	―	7.04%	268.20%
MATW	48 Neutral	$641.57M	―	-17.17%	4.68%	-9.04%	-339.31%
FIP	46 Neutral	$589.87M	―	-6.42%	2.33%	5.70%	36.39%
FBYD	39 Underperform	$837.62M	4.49	635.79%	―	32.28%	-109.19%

Compass Diversified Holdings Corporate Events

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.

Spark’s Take on CODI Stock

According to Spark, TipRanks’ AI Analyst, CODI is a Neutral.

Compass Diversified Holdings exhibits a mix of strengths and challenges. Strong financial performance and strategic initiatives support a positive outlook, but high leverage and negative cash flows pose ongoing risks. The bearish technical indicators and negative P/E ratio weigh on the stock’s valuation, though a high dividend yield provides some compensation.

To see Spark’s full report on CODI stock, click here.

Compass Diversified Holdings Reports Strong 2024 Financial Results

Compass Diversified Holdings reported strong financial results for the fourth quarter and full year of 2024, driven by double-digit sales growth and a significant increase in adjusted EBITDA. The company saw accelerated growth in both its consumer and industrial businesses, with notable sales increases attributed to acquisitions and strong performance from subsidiaries like Lugano and BOA. CODI’s strategic actions included the sale of Ergobaby, issuance of preferred shares, and repurchasing of common shares, which have bolstered its financial position. The company also declared cash distributions for its common and preferred shares, reflecting its robust earnings and profit expectations. Looking ahead to 2025, CODI anticipates continued growth in adjusted EBITDA and earnings, supported by its current subsidiaries.