Compass Diversified (NYSE:CODI) Posts Earnings Results

Compass Diversified (NYSE:CODI) issued its quarterly earnings results on Monday. The financial services provider reported $0.86 earnings per share for the quarter, topping analysts’ consensus estimates of $0.09 by $0.77, FiscalAI reports. Compass Diversified had a negative return on equity of 9.53% and a negative net margin of 12.30%.The firm had revenue of $424.04 million during the quarter, compared to the consensus estimate of $425.35 million.

Here are the key takeaways from Compass Diversified’s conference call:

• Broad-based operating growth: Continuing subsidiaries generated approximately $92 million in second-quarter adjusted EBITDA, up 12.6% year over year, led by branded consumer businesses and Arnold Magnetic Technologies. BOA, The Honey Pot Co., PrimaLoft, 5.11, and Arnold all delivered double-digit EBITDA growth.
• Deleveraging and liquidity improved materially. CODI applied more than $280 million from the Sterno food-service sale to debt reduction, ending the quarter with approximately $1.6 billion of debt, an 87 million cash balance, and covenant leverage of 4.8 times versus 5.3 times in the first quarter.
• The amended management services agreement is expected to reduce 2027 fees by approximately $20 million versus the prior formula, while tying a greater portion of compensation to shareholder returns and operating performance. Management also indicated that additional asset sales remain a key potential catalyst for closing the valuation discount.
• Altor remained a significant weakness, with adjusted EBITDA down roughly 50% as tariffs, weaker vaccine demand, higher input costs, competition, and poor commercial execution pressured results. Management expects only gradual improvement over the next four to five quarters.
• CODI maintained its full-year 2026 subsidiary adjusted EBITDA outlook of $320 million to $365 million, raising the branded consumer range to $235 million–$270 million but lowering industrial guidance to $85 million–$95 million. Management expects approximately $50 million of free cash flow after payments, excluding the potential impact of future divestitures.

Compass Diversified Price Performance

Shares of CODI traded up $0.05 during mid-day trading on Monday, reaching $11.05. 877,262 shares of the stock traded hands, compared to its average volume of 1,099,437. Compass Diversified has a 1 year low of $4.58 and a 1 year high of $12.64. The firm has a fifty day moving average price of $10.35 and a 200 day moving average price of $9.23. The company has a current ratio of 2.67, a quick ratio of 1.56 and a debt-to-equity ratio of 34.60. The company has a market cap of $831.40 million, a price-to-earnings ratio of -2.83 and a beta of 1.27.

Analyst Ratings Changes

Several brokerages recently issued reports on CODI. Weiss Ratings reissued a “sell (d-)” rating on shares of Compass Diversified in a research note on Friday, July 17th. TD Cowen restated a “buy” rating and set a $12.50 price objective on shares of Compass Diversified in a research note on Thursday, July 16th. Two investment analysts have rated the stock with a Buy rating, three have given a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat, the company currently has a consensus rating of “Hold” and an average target price of $12.67.

Hedge Funds Weigh In On Compass Diversified

Institutional investors have recently made changes to their positions in the stock. Invesco Ltd. raised its position in Compass Diversified by 64.2% during the fourth quarter. Invesco Ltd. now owns 305,005 shares of the financial services provider’s stock valued at $1,464,000 after purchasing an additional 119,224 shares in the last quarter. XTX Topco Ltd bought a new stake in Compass Diversified in the fourth quarter valued at approximately $227,000. Tudor Investment Corp ET AL boosted its position in Compass Diversified by 3.7% during the 4th quarter. Tudor Investment Corp ET AL now owns 458,624 shares of the financial services provider’s stock valued at $2,201,000 after buying an additional 16,266 shares during the period. Saba Capital Management L.P. boosted its holdings in shares of Compass Diversified by 36.0% during the fourth quarter. Saba Capital Management L.P. now owns 409,259 shares of the financial services provider’s stock worth $1,964,000 after purchasing an additional 108,327 shares during the period. Finally, Inspire Investing LLC raised its position in Compass Diversified by 42.5% during the 4th quarter. Inspire Investing LLC now owns 98,544 shares of the financial services provider’s stock valued at $473,000 after purchasing an additional 29,389 shares during the last quarter. Institutional investors own 72.73% of the company’s stock.

Compass Diversified Company Profile

Compass Diversified Holdings (NYSE:CODI) is a publicly traded private equity company headquartered in Bethesda, Maryland. The firm specializes in acquiring and managing middle-market businesses across a variety of industries, with a focus on driving operational performance and sustainable growth. As an externally managed entity, Compass Diversified leverages a disciplined investment approach to build a portfolio of market-leading companies that benefit from strategic oversight, capital support and shared best practices.

Compass Diversified’s investment activities span five core sectors: branded consumer, consumer services, differentiated industrial products, value-added distribution and business services.