Critical Review: Brookfield Wealth Solutions (NYSE:BNT) and Compass Diversified (NYSE:CODI)

Compass Diversified (NYSE:CODI) and Brookfield Wealth Solutions (NYSE:BNT) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Insider & Institutional Ownership

72.7% of Compass Diversified shares are owned by institutional investors. Comparatively, 20.3% of Brookfield Wealth Solutions shares are owned by institutional investors. 1.6% of Compass Diversified shares are owned by insiders. Comparatively, 1.0% of Brookfield Wealth Solutions shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Compass Diversified has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500. Comparatively, Brookfield Wealth Solutions has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500.

Profitability

This table compares Compass Diversified and Brookfield Wealth Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Compass Diversified	-5.38%	-10.36%	-0.10%
Brookfield Wealth Solutions	0.15%	0.10%	0.01%

Analyst Recommendations

This is a summary of current ratings for Compass Diversified and Brookfield Wealth Solutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Compass Diversified	1	2	3	0	2.33
Brookfield Wealth Solutions	0	1	0	0	2.00

Compass Diversified currently has a consensus target price of $16.50, indicating a potential upside of 46.61%. Given Compass Diversified’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Compass Diversified is more favorable than Brookfield Wealth Solutions.

Earnings and Valuation

This table compares Compass Diversified and Brookfield Wealth Solutions”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Compass Diversified	$1.87 billion	0.45	-$226.41 million	($2.17)	-5.19
Brookfield Wealth Solutions	$11.63 billion	1.07	$766.00 million	$0.26	141.81

Brookfield Wealth Solutions has higher revenue and earnings than Compass Diversified. Compass Diversified is trading at a lower price-to-earnings ratio than Brookfield Wealth Solutions, indicating that it is currently the more affordable of the two stocks.

Summary

Brookfield Wealth Solutions beats Compass Diversified on 9 of the 14 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 Brookfield Wealth Solutions

Brookfield Wealth Solutions is focused on securing the financial futures of individuals and institutions through a range of retirement services, wealth protection products and tailored capital solutions. Through our operating subsidiaries, we offer a broad range of insurance products and services, including annuities, personal and commercial property and casualty insurance and life insurance.The company was incorporated in 2020 and is headquartered in Pembroke, Bermuda.