Value
7.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 7.6 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 16.1x
- ▸PEG: 0.12
- ▸Attractively valued
CODI · Why this verdict
Why D/B/A Compass Diversified Holdi (CODI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Compass Diversified is a cheap, free-cash-flow-positive conglomerate with notable insider buying and a 38.8% gap to the analyst target, held back by below-floor quality, declining revenue, no moat and erratic earnings.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Quality scores 3.4, below the 4.0 floor, with no competitive moat, net margin and ROE components at 0.0, though free cash flow margin is a positive 7% and FCF yield is 15.5%. Quality breakdown | Net margin and ROE should move above 0 and the quality score should climb above the 4.0 floor. | →Stable |
| CounterA 15.5% FCF yield suggests the market already prices in poor earnings, and holding-company accounting depresses reported margins relative to cash generation. | ||
The stock trades at a forward P/E of 15.5x and a PEG of 0.12, with the $10.41 price 38.8% below the $14.45 analyst target. Valuation breakdown | Price should close part of the gap to the $14.45 target over the next 12 months as earnings stabilize. | →Stable |
| CounterLight analyst coverage dampens the target signal, and a PEG of 0.12 rests on an earnings rebound from depressed levels that has not been consistent. | ||
Insiders made 8 purchases worth $2.43M over the last 90 days, 0.31% of market cap, with no insider selling. Insider | Insiders should keep buying or at least hold, with no net insider selling over the next 12 months. | →Stable |
| CounterInsider purchases in a falling stock can be early, and the last transaction was on 2026-08-26, so there has been no new buying since the August earnings miss. | ||
Revenue is declining 11%, and quarterly revenue of $424.0M is down from $478.7M a year earlier. Growth breakdown | Quarterly revenue should stabilize and return to year-over-year growth, reaching at least the $410.5M next-quarter estimate level. | →Stable |
| CounterThe next-quarter estimate of $410.5M is already below the latest quarter, so analysts expect further declines, and the company ranks near the bottom of peers for growth. | ||
EPS has swung between large misses and large beats, with 2 beats and 2 misses in the last 4 quarters, including a -$0.09 result against a $0.09 estimate in August 2026. Last 4 quarters | EPS should land at or above estimates in the report due in 11 days and in the following quarter. | →Stable |
| CounterAverage surprise of 90.5% is skewed by tiny estimates, and the pattern of misses (including a -$0.70 loss in January 2026) shows earnings are hard to forecast. | ||
Quality scores 3.4, below the 4.0 floor, with no competitive moat, net margin and ROE components at 0.0, though free cash flow margin is a positive 7% and FCF yield is 15.5%.
→StableQuality breakdown
- Expectation
- Net margin and ROE should move above 0 and the quality score should climb above the 4.0 floor.
CounterA 15.5% FCF yield suggests the market already prices in poor earnings, and holding-company accounting depresses reported margins relative to cash generation.
The stock trades at a forward P/E of 15.5x and a PEG of 0.12, with the $10.41 price 38.8% below the $14.45 analyst target.
→StableValuation breakdown
- Expectation
- Price should close part of the gap to the $14.45 target over the next 12 months as earnings stabilize.
CounterLight analyst coverage dampens the target signal, and a PEG of 0.12 rests on an earnings rebound from depressed levels that has not been consistent.
Insiders made 8 purchases worth $2.43M over the last 90 days, 0.31% of market cap, with no insider selling.
→StableInsider
- Expectation
- Insiders should keep buying or at least hold, with no net insider selling over the next 12 months.
CounterInsider purchases in a falling stock can be early, and the last transaction was on 2026-08-26, so there has been no new buying since the August earnings miss.
Revenue is declining 11%, and quarterly revenue of $424.0M is down from $478.7M a year earlier.
→StableGrowth breakdown
- Expectation
- Quarterly revenue should stabilize and return to year-over-year growth, reaching at least the $410.5M next-quarter estimate level.
CounterThe next-quarter estimate of $410.5M is already below the latest quarter, so analysts expect further declines, and the company ranks near the bottom of peers for growth.
EPS has swung between large misses and large beats, with 2 beats and 2 misses in the last 4 quarters, including a -$0.09 result against a $0.09 estimate in August 2026.
→StableLast 4 quarters
- Expectation
- EPS should land at or above estimates in the report due in 11 days and in the following quarter.
CounterAverage surprise of 90.5% is skewed by tiny estimates, and the pattern of misses (including a -$0.70 loss in January 2026) shows earnings are hard to forecast.
Per-dimension breakdown
Quality
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.2 |
| Gross margin | 4.6 |
| Op margin | 2.7 |
| Net margin | 0.0 |
| Current ratio | 7.8 |
| FCF quality | 5.4 |
| Moat | 3.2 |
| Piotroski F | 6.7 |
- ▸FCF-positive but moderate margins (FCF margin 7%, FCF yield 14.9%)
- ▸No competitive moat
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 10.0 |
- ▸Declining revenue: -11%
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 6.7 |
| OBV | 1.0 |
| MA position | 7.0 |
| Volume | 4.6 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.7 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 58%
Insider
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 8.0 |
| insider conviction | 8.0 |
| holder change | 3.1 |
| notable moves | 3.0 |
- ▸Notable insider buying — $2,426,410 (0.299% of mkt cap)
Peer rank
2.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.1 |
| quality rank | 0.7 |
| growth rank | 0.7 |
Technical
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.2 |
| support resistance | 4.2 |
| 52w position | 6.3 |
| gap | 7.0 |
Risk (lower is worse)
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.0 |
| days to cover | 2.1 |
| volatility | 1.2 |
| put call | 9.0 |
| implied vol | 3.4 |
| beta | 5.8 |
| debt equity | 2.1 |
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Earnings concerns: 2B/2M
- ▸Earnings in 6 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (7)
- MOMENTUM:5.0>=4.5
- ASYMMETRY:3.8>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- EARNINGS_PROXIMITY:6d<=7d
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
3.76
Upside
+34.2%
Downside
9.1%
Sizing output
AVOID
SetupRange Bound — RSI 47 mid-range, Bollinger mid-band
EdgeInst Constrain — Small cap ($0.8B) below institutional reach
SuitabilityAggressive — MCap $0.8B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the EARNINGS_PROXIMITY gate's 6d<=7d outcome against Value at 7.3 and asymmetric R:R of 3.76.
The strongest dimensions are Value at 7.3, Sentiment at 6.5, and Catalyst at 5.8; the weakest are Peer rank at 2.6, Quality at 3.4, and Risk (lower is worse) at 4.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 3.76 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cheap Valuation With Target Upside
Trip ifAnalyst target falls below $11.45, leaving less than 10% upside from the current $10.41.
- P2Insider Buying Conviction
Trip ifNet insider selling over 90 days exceeds 0.1% of market cap, reversing the current net buying of 0.31%.
- P3Quality Below Floor No Moat
Trip ifQuality score falls below 2.5 from the current 3.4.
- P4Declining Revenue
Trip ifQuarterly revenue falls below $410.5M, the next-quarter estimate, from the current $424.0M.
- P5Erratic Earnings Record
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.