Compass Diversified Holdings

CODI

Household Furniture

Mkt Cap

$1.686B

PE

12.11

Debt

$1.739B

Cash

$64.72M

EV

$3.36B

FCF

$605K

Market Cap

$1.686B

P/E Ratio

12.11

Debt

$1.739B

Cash

$64.72M

EV

$3.36B

FCF

$605K

Charts data: {"Earnings":[{"time":"2014-12-30","value":278835000},{"time":"2015-12-30","value":144107000},{"time":"2016-12-30","value":30906000},{"time":"2017-12-30","value":-13654000},{"time":"2018-12-30","value":-5702000},{"time":"2019-12-30","value":301865000},{"time":"2020-12-30","value":22780000},{"time":"2021-12-30","value":114552000},{"time":"2022-12-30","value":36387000},{"time":"2023-12-30","value":246286000}],"Sales":[{"time":"2014-12-30","value":982300000},{"time":"2015-12-30","value":727978000},{"time":"2016-12-30","value":978309000},{"time":"2017-12-30","value":1269729000},{"time":"2018-12-30","value":1691673000},{"time":"2019-12-30","value":1450253000},{"time":"2020-12-30","value":1560757000},{"time":"2021-12-30","value":1841668000},{"time":"2022-12-30","value":2264044000},{"time":"2023-12-30","value":2058876000}],"Net Margins":[{"time":"2014-12-30","value":0.283859309783162},{"time":"2015-12-30","value":0.19795515798554353},{"time":"2016-12-30","value":0.031591245710711036},{"time":"2017-12-30","value":-0.01075347574167401},{"time":"2018-12-30","value":-0.003370627774989611},{"time":"2019-12-30","value":0.208146440655527},{"time":"2020-12-30","value":0.014595481551580419},{"time":"2021-12-30","value":0.06220013596370247},{"time":"2022-12-30","value":0.016071684119213232},{"time":"2023-12-30","value":0.11962157993002007}],"Assets":[{"time":"2014-12-30","value":1547430000},{"time":"2015-12-30","value":1425645000},{"time":"2016-12-30","value":1777155000},{"time":"2017-12-30","value":1820303000},{"time":"2018-12-30","value":2372335000},{"time":"2019-12-30","value":1891892000},{"time":"2020-12-30","value":2598518000},{"time":"2021-12-30","value":3144261000},{"time":"2022-12-30","value":3849631000},{"time":"2023-12-30","value":3816981000}],"Stockholders Equity":[{"time":"2014-12-30","value":808334000},{"time":"2015-12-30","value":873219000},{"time":"2016-12-30","value":894544000},{"time":"2017-12-30","value":925999000},{"time":"2018-12-30","value":919342000},{"time":"2019-12-30","value":1165875000},{"time":"2020-12-30","value":1220148000},{"time":"2021-12-30","value":1284530000},{"time":"2022-12-30","value":1361962000},{"time":"2023-12-30","value":1519381000}],"ROE":[{"time":"2014-12-30","value":0.34495023096888167},{"time":"2015-12-30","value":0.16502962028998452},{"time":"2016-12-30","value":0.034549446421864104},{"time":"2017-12-30","value":-0.014745156312263837},{"time":"2018-12-30","value":-0.0062022620526419985},{"time":"2019-12-30","value":0.2589171223330117},{"time":"2020-12-30","value":0.018669866278517033},{"time":"2021-12-30","value":0.08917814297836563},{"time":"2022-12-30","value":0.02671660442802369},{"time":"2023-12-30","value":0.162096274732934}],"ROA":[{"time":"2014-12-30","value":0.21100534434514},{"time":"2015-12-30","value":0.028925854613175088},{"time":"2016-12-30","value":0.04945544986227988},{"time":"2017-12-30","value":0.014944764690274092},{"time":"2018-12-30","value":0.029219313461210157},{"time":"2019-12-30","value":0.03181788389612092},{"time":"2020-12-30","value":0.036495032938005434},{"time":"2021-12-30","value":0.04436750002623828},{"time":"2022-12-30","value":0.0456064490336866},{"time":"2023-12-30","value":0.023596921231727377}]}

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, safety & security, electronic components, food, 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.

Sector

10-Q
9/30/23
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6/30/23
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3/31/23
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12/31/22
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12/31/18
10-Q
9/30/18
10-Q
6/30/18
10-Q
3/31/18
10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Compass Diversified Holdings

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$605K	$491.7K	$399.6K	$324.8K	$264K	$214.5K	$174.4K	$141.7K	$115.2K	$93.6K	$76.08K	$760.8K
DCF		$427.6K	$302.2K	$213.6K	$150.9K	$106.7K	$75.38K	$53.27K	$37.65K	$26.61K	$18.8K	$188K
Value	$1.601M

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 8.5%

Earnings Stability -4.9%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	20%	3.2%	-1.1%	-0.34%	21%	1.5%	6.2%	1.6%	12%	6.8%
ROA	2.9%	4.9%	1.5%	2.9%	3.2%	3.6%	4.4%	4.6%	2.4%	2.1%
ROE	17%	3.5%	-1.5%	-0.62%	26%	1.9%	8.9%	2.7%	16%	9.3%

What is the average Net Margin?

The average Net Margin over the past 5 years is +6.95%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +0.25%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +3.52%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +0.06%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +9.16%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +0.62%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

The company has high debt with respect to the cashflow it generates.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	4.76	6.53	16.10	17.29	6.60	7.63	13.64	-20.09	76.00	2873.55
Debt Equity	0.37	0.64	0.64	1.21	0.34	0.74	1.00	1.37	1.12	1.16
MIN
Graham Stability	-	-	-9%	-11%	100%	24%	100%	25%	100%	-11%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 2873.55.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 6.27.

What is the Graham’s Stability?

Graham’s Stability measure stands at -0.11.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	11%	4%	9.7%	-9.1%	-0.27%
Net Income	35%	-	120%	580%	54%
Stockholders Equity	7.9%	11%	7.6%	12%	0.56%
FCF	-18%	-19%	-43%	-	2.1%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +4.01%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is -0.27%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is -.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +54.18%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +10.57%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +0.56%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -19.04%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is +2.13%.