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

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

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 stock traded up $0.05 during midday trading on Monday, hitting $11.05. 877,262 shares of the company traded hands, compared to its average volume of 1,099,437. Compass Diversified has a twelve month low of $4.58 and a twelve month high of $12.64. 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 business has a 50 day simple moving average of $10.35 and a 200-day simple moving average of $9.23. The stock has a market capitalization of $831.40 million, a price-to-earnings ratio of -2.83 and a beta of 1.27.

Analysts Set New Price Targets

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

Institutional Trading of Compass Diversified

Several large investors have recently modified their holdings of the company. AQR Capital Management LLC bought a new stake in Compass Diversified during the first quarter valued at about $294,000. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. grew its position in shares of Compass Diversified by 4.6% in the first quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 39,635 shares of the financial services provider’s stock valued at $740,000 after purchasing an additional 1,728 shares during the last quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC increased its stake in shares of Compass Diversified by 6.9% in the first quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 154,458 shares of the financial services provider’s stock worth $2,884,000 after purchasing an additional 10,006 shares during the period. Jane Street Group LLC increased its stake in shares of Compass Diversified by 345.5% in the first quarter. Jane Street Group LLC now owns 193,907 shares of the financial services provider’s stock worth $3,620,000 after purchasing an additional 150,386 shares during the period. Finally, Geode Capital Management LLC lifted its position in shares of Compass Diversified by 5.5% during the 2nd quarter. Geode Capital Management LLC now owns 862,549 shares of the financial services provider’s stock worth $5,416,000 after purchasing an additional 44,938 shares during the last quarter. 72.73% of the stock is owned by institutional investors.

Compass Diversified Company Profile

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.