Financial Review: Compass Diversified (NYSE:CODI) versus BlackRock MuniHoldings California Quality Fund (NYSE:MUC)

Compass Diversified (NYSE:CODI) and BlackRock MuniHoldings California Quality Fund (NYSE:MUC) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, dividends, earnings and risk.

Dividends

Compass Diversified pays an annual dividend of $1.00 per share and has a dividend yield of 9.5%. BlackRock MuniHoldings California Quality Fund pays an annual dividend of $0.48 per share and has a dividend yield of 4.4%. Compass Diversified pays out -25.6% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current ratings and target prices for Compass Diversified and BlackRock MuniHoldings California Quality Fund, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Compass Diversified	1	3	1	0	2.00
BlackRock MuniHoldings California Quality Fund	0	0	0	0	0.00

Compass Diversified currently has a consensus price target of $12.75, indicating a potential upside of 20.73%. Given Compass Diversified’s stronger consensus rating and higher possible upside, research analysts clearly believe Compass Diversified is more favorable than BlackRock MuniHoldings California Quality Fund.

Earnings & Valuation

This table compares Compass Diversified and BlackRock MuniHoldings California Quality Fund”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Compass Diversified	$1.85 billion	0.43	-$226.41 million	($3.91)	-2.70
BlackRock MuniHoldings California Quality Fund	N/A	N/A	N/A	N/A	N/A

BlackRock MuniHoldings California Quality Fund has lower revenue, but higher earnings than Compass Diversified.

Profitability

This table compares Compass Diversified and BlackRock MuniHoldings California Quality Fund’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Compass Diversified	-12.30%	-9.53%	0.06%
BlackRock MuniHoldings California Quality Fund	N/A	N/A	N/A

Volatility and Risk

Compass Diversified has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, BlackRock MuniHoldings California Quality Fund has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Institutional & Insider Ownership

72.7% of Compass Diversified shares are held by institutional investors. Comparatively, 31.0% of BlackRock MuniHoldings California Quality Fund shares are held by institutional investors. 1.6% of Compass Diversified shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Compass Diversified beats BlackRock MuniHoldings California Quality Fund on 10 of the 12 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 BlackRock MuniHoldings California Quality Fund

BlackRock MuniHoldings California Quality Fund, Inc. is a closed ended fixed income mutual fund launched by BlackRock, Inc. It is managed by BlackRock Advisors, LLC. The fund invests in fixed income markets. It invests primarily in a portfolio of long-term investment-grade municipal obligations, the interest on which is exempt from Federal and California income taxes. BlackRock MuniHoldings California Quality Fund, Inc. was formed in 1997 and is domiciled in United States.