Compass Diversified (NYSE:CODI) vs. Invesco Quality Municipal Income Trust (NYSE:IQI) Critical Review

Invesco Quality Municipal Income Trust (NYSE:IQI) and Compass Diversified (NYSE:CODI) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.

Risk & Volatility

Invesco Quality Municipal Income Trust has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Compass Diversified has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Invesco Quality Municipal Income Trust and Compass Diversified, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Invesco Quality Municipal Income Trust	0	0	0	0	0.00
Compass Diversified	1	3	2	0	2.17

Compass Diversified has a consensus price target of $12.67, suggesting a potential upside of 20.99%. Given Compass Diversified’s stronger consensus rating and higher probable upside, analysts clearly believe Compass Diversified is more favorable than Invesco Quality Municipal Income Trust.

Insider and Institutional Ownership

72.7% of Compass Diversified 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 company is poised for long-term growth.

Earnings & Valuation

This table compares Invesco Quality Municipal Income Trust and Compass Diversified”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Invesco Quality Municipal Income Trust	N/A	N/A	N/A	N/A	N/A
Compass Diversified	$1.87 billion	0.42	-$226.41 million	($3.91)	-2.68

Invesco Quality Municipal Income Trust has higher earnings, but lower revenue than Compass Diversified.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Invesco Quality Municipal Income Trust	N/A	N/A	N/A
Compass Diversified	-12.30%	-9.53%	0.06%

Summary

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

About Invesco Quality Municipal Income Trust

Invesco Quality Municipal Income Trust is a closed-ended fixed income mutual fund launched by Invesco Ltd. The fund is co-managed by Invesco Advisers, Inc., INVESCO Asset Management Deutschland GmbH, INVESCO Asset Management Limited, INVESCO Asset Management (Japan) Limited, Invesco Hong Kong Limited, INVESCO Senior Secured Management, Inc., and Invesco Canada Ltd. It invests in the fixed income markets of the United States. The fund primarily invests in investment grade municipal securities which include municipal bonds, municipal notes, and municipal commercial paper. It employs fundamental analysis with bottom-up security selection approach to create its portfolio. The fund was previously known as Morgan Stanley Quality Municipal Income Trust. Invesco Quality Municipal Income Trust was formed on September 29, 1992 and is domiciled in the United States.

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.