Reviewing MFS High Income Municipal Trust (NYSE:CXE) & Compass Diversified (NYSE:CODI)

Compass Diversified (NYSE:CODI) and MFS High Income Municipal Trust (NYSE:CXE) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, earnings, risk, dividends, valuation, analyst recommendations and profitability.

Profitability

This table compares Compass Diversified and MFS High Income Municipal Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Compass Diversified	-12.30%	-4.28%	0.06%
MFS High Income Municipal Trust	N/A	N/A	N/A

Earnings & Valuation

This table compares Compass Diversified and MFS High Income Municipal Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Compass Diversified	$1.87 billion	0.48	-$226.41 million	($3.88)	-3.09
MFS High Income Municipal Trust	N/A	N/A	N/A	N/A	N/A

MFS High Income Municipal Trust has lower revenue, but higher earnings than Compass Diversified.

Volatility & Risk

Compass Diversified has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500. Comparatively, MFS High Income Municipal Trust has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Institutional & Insider Ownership

72.7% of Compass Diversified shares are owned by institutional investors. Comparatively, 34.4% of MFS High Income Municipal Trust shares are owned by institutional investors. 1.6% of Compass Diversified shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Compass Diversified and MFS High Income Municipal Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Compass Diversified	1	4	1	0	2.00
MFS High Income Municipal Trust	0	0	0	0	0.00

Compass Diversified currently has a consensus price target of $12.75, suggesting a potential upside of 6.21%. Given Compass Diversified’s stronger consensus rating and higher possible upside, equities analysts clearly believe Compass Diversified is more favorable than MFS High Income Municipal Trust.

Summary

Compass Diversified beats MFS High Income Municipal Trust on 8 of the 10 factors compared between the two stocks.

About Compass Diversified

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, healthcare, safety & security, electronic components, food and 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 2006 and is based in Westport, Connecticut with an additional office in Costa Mesa, California.

About MFS High Income Municipal Trust

MFS High Income Municipal Trust is a close ended fixed income mutual fund launched and managed by Massachusetts Financial Services Company. The fund invests in the fixed income markets. It primarily invests in municipal bonds and local general obligations of various sectors, such as multifamily, hospitals, care retirement, and investor-owned utilities. The fund benchmarks the performance of its portfolio against Barclays Municipal Bond Index. It was formerly known as Colonial High Income Municipal Trust. MFS High Income Municipal Trust was formed on February 17, 1989 and is domiciled in United States.