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what it is
Compass Diversified buys and runs midsize businesses, then hopes the collection is worth more than the mess around it.
how it gets paid
Last year Compass Diversifed made $1.9B in revenue.
why it's growing
Revenue grew 299.9% last year. Gross margin at 43.1% matters because it shows the underlying businesses can still produce healthy product economics even while reported earnings are a mess.
what just happened
Latest quarter revenue fell to $469M, but EPS came in at $0.86 versus a -$1.00 estimate.
At a glance
B balance sheet — gets the job done, barely
25/100 earnings predictability — expect surprises
3.5% return on capital — nothing to write home about
-$0.70 fy2026 eps est
$2B fy2028 rev est
xvary composite: 39/100 — weak
What they do
Compass Diversified buys and runs midsize businesses, then hopes the collection is worth more than the mess around it.
This is a holding company, so your edge is diversification with control. It buys companies with $10 million to $75 million of cash flow, then owns the whole thing and adds bolt-on deals (bolt-on acquisitions → small add-on deals → faster growth without building from scratch). That helps when one unit blows up, but 2025 showed the flip side: one bad asset can still drag a $1.9 billion revenue base into a $3.00 per-share annual loss.
How they make money
$1.9B
annual revenue · their business grew +299.9% last year
total revenue
$1.9B
+299.9%
The products that matter
owns and manages subsidiaries
acquired operating businesses
$1.9B · 100% of revenue shown here
This snapshot only gives you the portfolio total: $1.9B in revenue and a 43.1% gross margin. That means the story is the collection, not one hero asset.
portfolio model
capital allocation engine
acquisition platform
15.7% operating margin
The model only works if acquisitions earn more than the capital put into them. Right now return on capital is 3.5%, which says the payoff has been thin.
execution bet
public equity wrapper
CODI shares
$400M market cap · $5–$23 range
The share price is telling you trust broke before revenue did. A stock that traded as high as $23 now sits near $5 despite $1.9B in annual sales.
volatility
Key numbers
$13
18-month target
Against a $5.30 stock, that target implies about 145% upside. That is the rebound case in one number.
-$3.00
2025 EPS
EPS → profit per share → so what: the company lost $3.00 for every share in 2025 while the stock trades at $5.30.
0.6%
operating margin
Operating margin → profit after operating costs → so what: the business has almost no room for mistakes.
$1.9B
annual revenue
The revenue base is real. The issue is turning it into profit, not finding customers.
Financial health
B
strength
- balance sheet grade B — adequate — nothing special
- risk rank 4 — safer than 20% of stocks
- price stability 15 / 100
- net profit margin 3.0% — keeps 3 cents of every dollar in revenue
- return on equity 6% — $0.06 profit for every $1 investors have put in
B — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in CODI 3 years ago → it's now worth $2,820.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Latest quarter revenue fell to $469M, but EPS came in at $0.86 versus a -$1.00 estimate.
Revenue was down 5% vs. prior year, and the trailing picture is still ugly with a $4.80 trailing EPS loss. Gross margin stayed at 43.1%, which tells you the products are not the main problem; the structure is.
$469M
revenue
$0.86
eps
43.1%
gross margin
the number that mattered
Gross margin at 43.1% matters because it shows the underlying businesses can still produce healthy product economics even while reported earnings are a mess.
-
compass diversified will likely record a substantial loss in the fourth quarter of 2025.
-
revenues probably fell to $545.7 million, reflecting the deconsolidation of lugano following its november chapter 11 bankruptcy filing.the audit committee’s investigation uncovered pervasive fraud, including fabricated sales transactions, overstated inventory, and undisclosed financing arrangements orchestrated by lugano’s former ceo, who resigned and relocated abroad.
-
codi’s remaining subsidiaries likely performed well during the period.
-
elevated legal and accounting expenses probably weighed on results.
-
overall, we estimate a loss of $1.00 per share during the quarter.
source: company earnings report, 2026
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What could go wrong
the #1 risk is earnings losses colliding with covenant pressure.
high
q3 losses raise the stakes
The latest quarter cited here produced $472.6M of revenue and an $87.2M net loss. That is not a margin wobble. That is a business profile the market punishes fast.
Latest cited quarter: $87.2M lost on $472.6M of revenue.
med
thin net margins leave very little buffer
A 43.1% gross margin sounds respectable until you follow it down to a 3.0% net margin. On $1.9B of revenue, a one-point margin swing is roughly $19M of profit or pain.
3.0% net margin on $1.9B revenue means the cushion is small.
med
the stock itself is telling you confidence broke
Price stability is 15/100, and the shares have traded between $5 and $23 over the last 52 weeks. When volatility looks like that, financing flexibility and investor patience both get thinner.
52-week range: $5–$23.
med
the growth number may flatter the underlying economics
Revenue rose 299.9% from last year. Return on capital is still just 3.5%. If scale does not turn into higher returns, the headline growth is mostly decoration.
299.9% revenue growth versus 3.5% return on capital.
On the numbers we have, $1.9B of annual revenue only produced a 3.0% net margin, and the latest cited quarter lost $87.2M on $472.6M of revenue. That's why the stock trades like distress instead of a clean turnaround.
source: institutional data · regulatory filings · risk analysis
Pay attention to
risk
whether losses start shrinking fast
The latest cited quarter lost $87.2M on $472.6M of revenue. That is the first thing you need fixed.
metric
whether 43.1% gross margin ever reaches the bottom line
Gross margin looks usable. Net margin at 3.0% says too much is getting eaten before shareholders see it.
trend
whether the stock can earn back trust
A 52-week range of $5–$23 and price stability of 15/100 tells you sentiment is broken. Price action is not noise here. It is part of the thesis.
calendar
the next update with hard numbers, not just commentary
A q4 2025 earnings call transcript exists, but this snapshot stays thin on fresh detail. The next clean quarter will matter more than any polished explanation.
Analyst rankings
earnings predictability
25 / 100
Low predictability means the numbers are hard to trust quarter to quarter. In human-speak, analysts do not view this as a smooth operator.
risk rank
4
Risk rank is a safety score. A 4 means this screens as riskier than most stocks, which lines up with the $5–$23 range.
price stability
15 / 100
This is not a bunker stock. When the market mood changes, CODI tends to feel it in full.
source: institutional data
Institutional activity
103 buyers vs. 104 sellers in 3q2025. total institutional holdings: 49.2M shares.
source: institutional data
Price targets
3-5 year target range
$4
$22
$5
current price
$13
target midpoint · +145% from current · 3-5yr high: $20 (+275% · 43% ann'l return)
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