Compass Diversified (NYSE: CODI) Quarterly Earnings Preview and Financial Analysis

• Compass Diversified (NYSE:CODI) is set to release its quarterly earnings with an estimated EPS of $0.47 and projected revenue of $569.5 million.
• The company has taken strategic measures to address financial irregularities, including entering a forbearance agreement and suspending quarterly cash distributions.
• CODI's financial metrics reveal a P/E ratio of 78.33, a debt-to-equity ratio of 1.37, and a current ratio of 4.07, indicating a strong liquidity position despite challenges.

Compass Diversified (NYSE:CODI) is a company that manages a diverse portfolio of niche businesses. It operates in various sectors, including consumer and industrial markets. CODI's business model involves acquiring and managing small to mid-sized companies, providing them with strategic guidance and financial support. The company faces competition from other diversified holding companies that also invest in a range of industries.

On May 28, 2025, CODI is set to release its quarterly earnings, with Wall Street analysts estimating an earnings per share (EPS) of $0.47 and projected revenue of approximately $569.5 million. This comes amid CODI's recent strategic measures to address financial irregularities at its subsidiary, Lugano Holding, Inc. The company has entered into a forbearance agreement with its lender group to ensure liquidity, as highlighted by GlobeNewswire.

CODI has taken steps to conserve cash by reducing management fees and suspending the quarterly cash distribution to common shareholders. These actions aim to enhance liquidity and reduce costs during the ongoing investigation into Lugano's practices. The company has also restricted further investment in Lugano, redirecting resources to its other eight market-leading subsidiaries.

Despite these challenges, CODI's financial metrics provide insight into its current position. The company has a price-to-earnings (P/E) ratio of 78.33, indicating that investors are willing to pay $78.33 for every dollar of earnings. Its price-to-sales ratio is 0.26, suggesting that the company's market value is 26% of its total sales. The enterprise value to sales ratio is 1.04, reflecting the company's total value compared to its sales.

CODI's debt-to-equity ratio is 1.37, showing a higher reliance on debt financing, with $1.37 in debt for every dollar of equity. However, the company maintains a strong liquidity position, as indicated by a current ratio of 4.07, meaning it has over four times more current assets than current liabilities. Despite a negative enterprise value to operating cash flow ratio of -33.71, CODI's earnings yield stands at 1.28%, representing the percentage of each dollar invested that was earned by the company.