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Compass Diversified Holdings Misses Where it Counts

By Seth Jayson – Updated Apr 10, 2017 at 1:23PM

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Just the facts, Fool.

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

The 10-second takeaway
For the quarter ended March 31 (Q1), Compass Diversified Holdings beat expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue increased. GAAP earnings per share expanded.

Gross margins were steady, operating margins grew, net margins grew.

Revenue details
Compass Diversified Holdings logged revenue of $241.6 million. The five analysts polled by S&P Capital IQ foresaw sales of $220.3 million on the same basis. GAAP reported sales were 24% higher than the prior-year quarter's $195.3 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 $0.03. The three earnings estimates compiled by S&P Capital IQ predicted $0.19 per share. GAAP EPS were $0.03 for Q1 versus -$0.02 per share for the prior-year quarter.

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 31.6%, much about the same as the prior-year quarter. Operating margin was 9.6%, 240 basis points better than the prior-year quarter. Net margin was 0.7%, 110 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $233.5 million. On the bottom line, the average EPS estimate is $0.25.

Next year's average estimate for revenue is $927.5 million. The average EPS estimate is $0.90.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 310 members out of 317 rating the stock outperform, and seven members rating it underperform. Among 85 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 85 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 $16.80.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Compass Diversified Holdings LLC Stock Quote
Compass Diversified Holdings LLC
CODI
$18.34 (1.55%) $0.28

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