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Compass Diversified Holdings Misses Where it Counts

By Seth Jayson - Updated Apr 7, 2017 at 11:50AM

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Just the facts, Fool.

Compass Diversified Holdings (NYSE: CODI) reported earnings on Nov. 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Compass Diversified Holdings beat expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue dropped significantly and GAAP earnings per share contracted significantly.

Gross margins increased, operating margins increased, net margins dropped.

Revenue details
Compass Diversified Holdings notched revenue of $241.2 million. The five analysts polled by S&P Capital IQ looked for revenue of $228.2 million on the same basis. GAAP reported sales were 51% lower than the prior-year quarter's $490.0 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.08. The five earnings estimates compiled by S&P Capital IQ averaged $0.27 per share. GAAP EPS of $0.06 for Q3 were 65% lower than the prior-year quarter's $0.17 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 31.9%, 920 basis points better than the prior-year quarter. Operating margin was 10.5%, 530 basis points better than the prior-year quarter. Net margin was 1.4%, 30 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $199.7 million. On the bottom line, the average EPS estimate is $0.14.

Next year's average estimate for revenue is $871.4 million. The average EPS estimate is $0.94.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 307 members out of 314 rating the stock outperform, and seven members rating it underperform. Among 78 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 78 give Compass Diversified Holdings a green thumbs-up, and give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Compass Diversified Holdings is outperform, with an average price target of $16.38.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Compass Diversified Holdings LLC Stock Quote
Compass Diversified Holdings LLC
CODI
$31.92 (3.30%) $1.02

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