Head-To-Head Comparison: Compass Diversified (NYSE:CODI) versus VanEck Biotech ETF (NASDAQ:BBH)

VanEck Biotech ETF (NASDAQ:BBH) and Compass Diversified (NYSE:CODI) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Profitability

This table compares VanEck Biotech ETF and Compass Diversified’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VanEck Biotech ETF	N/A	N/A	N/A
Compass Diversified	-7.08%	24.48%	-0.73%

Analyst Ratings

This is a summary of current recommendations for VanEck Biotech ETF and Compass Diversified, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VanEck Biotech ETF	0	7	1	0	2.67
Compass Diversified	2	2	2	0	2.00

VanEck Biotech ETF presently has a consensus target price of $195.33, suggesting a potential upside of 0.00%. Compass Diversified has a consensus target price of $14.00, suggesting a potential upside of 117.97%. Given Compass Diversified’s higher possible upside, analysts clearly believe Compass Diversified is more favorable than VanEck Biotech ETF.

Institutional and Insider Ownership

32.1% of VanEck Biotech ETF shares are owned by institutional investors. Comparatively, 72.7% of Compass Diversified shares are owned by institutional investors. 1.8% of Compass Diversified shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares VanEck Biotech ETF and Compass Diversified”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VanEck Biotech ETF	N/A	N/A	N/A	N/A	N/A
Compass Diversified	$2.20 billion	0.22	-$208.86 million	($2.74)	-2.34

VanEck Biotech ETF has higher earnings, but lower revenue than Compass Diversified.

Volatility and Risk

VanEck Biotech ETF has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, Compass Diversified has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Summary

Compass Diversified beats VanEck Biotech ETF on 7 of the 10 factors compared between the two stocks.

About VanEck Biotech ETF

The BIOTECH HOLDING COMPANY DEPOSITARY RECEIPTS or HOLDRS TRUST was formed under the depositary trust agreement, among The Bank of New York, as trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of the Biotech HOLDRS. The trust currently holds shares of common stock or American depositary shares issued by a group of companies that were, at the time of the initial offering, generally considered to be involved in various segments of thebiotechnology industry.

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.