For investors seeking insights into the industrial sector, D/B/A Compass Diversified Holdings (NYSE: CODI) offers a unique proposition with its diversified portfolio and promising financial metrics. As a conglomerate specializing in strategic acquisitions, CODI provides an intriguing case study in the world of industrial investments.
**Company Overview**
Based in the United States, Compass Diversified operates within the Industrials sector, specifically focusing on conglomerates. With a robust market capitalization of $1.24 billion, the firm specializes in acquiring and managing a diverse array of businesses. Its investment strategy targets leading industrial and branded consumer companies across various sectors, including textiles, consumer staples, and foodservice, emphasizing control and majority stakes. Since its inception in 2006, CODI has been a key player in North America’s middle-market investment landscape.
**Price Data and Valuation Metrics**
Currently trading at $16.54, CODI’s stock has experienced fluctuations, with a 52-week range of $15.85 to $24.27. Despite a relatively modest recent price change of 0.04%, the stock presents a compelling forward P/E ratio of 6.12. However, traditional valuation metrics such as trailing P/E, PEG, and price/book ratios remain undisclosed, potentially due to the company’s unique business model and portfolio structure.
**Performance Metrics**
Compass Diversified’s performance reflects a mixed bag. The company boasts an impressive revenue growth rate of 31.10%, yet it grapples with a negative EPS of -1.25 and a modest return on equity of 2.74%. The negative free cash flow figure ($93.48 million) indicates challenges in liquidity, despite the promising revenue trajectory. Investors should weigh these factors carefully, considering the broader context of CODI’s strategic investments and long-term growth potential.
**Dividend Information**
CODI stands out with a dividend yield of 6.05%, which is attractive for income-focused investors. However, the payout ratio of 404.62% suggests the dividends are not currently supported by earnings, raising questions about sustainability. This highlights the importance of understanding CODI’s financial strategy and potential for future revenue streams to support such payouts.
**Analyst Ratings & Targets**
The stock enjoys a favorable outlook, with 7 buy ratings and only 2 hold ratings, reflecting confidence in its strategic direction. The target price range of $23.00 to $36.00, with an average target of $30.29, suggests a significant 83.11% potential upside from current levels. Such a projection underscores the investor enthusiasm surrounding CODI’s growth prospects, despite existing financial challenges.
**Technical Indicators**
From a technical standpoint, CODI’s 50-day and 200-day moving averages stand at $19.15 and $21.30, respectively. The stock’s RSI (14) of 36.40 indicates it is approaching oversold territory, which might present a buying opportunity for those bullish on its future. The MACD and signal line both at -0.85 indicate a bearish momentum, warranting caution for short-term traders.
Compass Diversified Holdings presents a complex yet intriguing investment opportunity. Its diversified portfolio and strategic acquisition approach appeal to those seeking exposure to various industrial and consumer sectors. While its financial metrics highlight challenges, the potential upside and strong buy ratings from analysts suggest a promising future. As with any investment, thorough due diligence is crucial, especially considering the company’s current financial dynamics and dividend sustainability.
