Compass Diversified (NYSE:CODI) Issues Earnings Results, Beats Expectations By $0.77 EPS

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

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 Stock Performance

CODI traded up $0.05 during mid-day trading on Monday, reaching $11.05. 877,262 shares of the company traded hands, compared to its average volume of 1,099,437. Compass Diversified has a 52-week low of $4.58 and a 52-week high of $12.64. The stock has a market capitalization of $831.40 million, a P/E ratio of -2.83 and a beta of 1.27. The company has a quick ratio of 1.56, a current ratio of 2.67 and a debt-to-equity ratio of 34.60. The company’s fifty day moving average price is $10.35 and its 200-day moving average price is $9.23.

Hedge Funds Weigh In On Compass Diversified

Large investors have recently added to or reduced their stakes in the company. Southeast Asset Advisors LLC lifted its stake in shares of Compass Diversified by 66.7% during the 4th quarter. Southeast Asset Advisors LLC now owns 20,000 shares of the financial services provider’s stock valued at $96,000 after buying an additional 8,000 shares in the last quarter. CIBC Bancorp USA Inc. bought a new stake in Compass Diversified during the 3rd quarter valued at approximately $81,000. Voleon Capital Management LP boosted its stake in Compass Diversified by 32.0% in the 3rd quarter. Voleon Capital Management LP now owns 16,098 shares of the financial services provider’s stock worth $107,000 after purchasing an additional 3,901 shares during the period. Tower Research Capital LLC TRC boosted its stake in Compass Diversified by 157.9% in the 2nd quarter. Tower Research Capital LLC TRC now owns 13,972 shares of the financial services provider’s stock worth $88,000 after purchasing an additional 8,555 shares during the period. Finally, Tidal Investments LLC purchased a new stake in Compass Diversified during the 2nd quarter valued at approximately $89,000. Hedge funds and other institutional investors own 72.73% of the company’s stock.

Wall Street Analysts Forecast Growth

CODI has been the subject of several research analyst reports. Weiss Ratings reaffirmed a “sell (d-)” rating on shares of Compass Diversified in a research report on Friday, July 17th. TD Cowen reissued a “buy” rating and issued a $12.50 price target on shares of Compass Diversified in a research report on Thursday, July 16th. Two analysts have rated the stock with a Buy rating, three have issued a Hold rating and one has given a Sell rating to the company. According to MarketBeat, the company presently has a consensus rating of “Hold” and an average price target of $12.67.

About Compass Diversified

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.