Luvu Brands (OTCMKTS:LUVU) and Compass Diversified (NYSE:CODI) are both small-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, analyst recommendations, risk, valuation, institutional ownership and earnings.

Profitability

This table compares Luvu Brands and Compass Diversified’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Luvu Brands 0.89% -6.76% 4.09%
Compass Diversified 2.99% 3.09% 1.11%

Volatility & Risk

Luvu Brands has a beta of -2.55, meaning that its stock price is 355% less volatile than the S&P 500. Comparatively, Compass Diversified has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500.

Institutional & Insider Ownership

33.4% of Compass Diversified shares are held by institutional investors. 2.4% of Compass Diversified shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Luvu Brands and Compass Diversified’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Luvu Brands $16.43 million 0.14 $140,000.00 N/A N/A
Compass Diversified $1.27 billion 0.73 $27.99 million N/A N/A

Compass Diversified has higher revenue and earnings than Luvu Brands.

Analyst Recommendations

This is a breakdown of recent recommendations for Luvu Brands and Compass Diversified, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Luvu Brands 0 0 0 0 N/A
Compass Diversified 0 0 0 0 N/A

Dividends

Compass Diversified pays an annual dividend of $1.44 per share and has a dividend yield of 9.3%. Luvu Brands does not pay a dividend.

Summary

Compass Diversified beats Luvu Brands on 9 of the 10 factors compared between the two stocks.

About Luvu Brands

Luvu Brands, Inc. designs, manufactures, and markets various wellness, lifestyle, and casual furniture products worldwide. The company provides sexual positioning furniture products under the brand name of Liberator; top-of-bed comfort pillows under the Avana brand name; and casual fashion furniture, child beanbags, teen and adult beanbags, outdoor loungers, loveseats, and daybeds under the brand name of Jaxx. It is also involved in the purchase and sale of products to retailers and mass merchants. The company markets its products directly through various Websites that include liberator.com, liberatorshop.com, theliberator.co.uk, jaxxliving.com, and avanacomfort.com, as well as through concept factory store, online mass merchants, and retail stores. The company was formerly known as Liberator, Inc. and changed its name to Luvu Brands, Inc. in November 2015. Luvu Brands, Inc. was founded in 2000 and is headquartered in Atlanta, Georgia.

About Compass Diversified

Compass Diversified Holdings LLC is a private equity firm specializing in acquisitions, buyouts, industry consolidation, recapitalization, and middle market investments. It seeks to invest in niche industrial or branded consumer companies, manufacturing, distribution, consumer products, business services sector, safety & security, electronic components, food, foodservice. The firm prefers to invest in companies based in North America. It seeks to invest between $4 million and $700 million in companies with cash flows between $10 million and $450 million, enterprise values between $100 million and $500 million, and an EBITDA between $5 million and $75 million. It seeks to acquire controlling ownership interests in its portfolio companies and can make additional platform acquisitions. The firm prefer to have majority, and minority stake in companies. The firm invests through its balance sheet and typically holds investments between five to seven years. Compass Group Management LLC is the external manager of the Compass Diversified Holdings LLC and manages day-to-day business and operations of firm. Compass Diversified Holdings LLC was founded in 2005 and is based in Westport, Connecticut with an additional office in Irvine, California.

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