Value
7.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 4.2 |
| Fwd P/E | 5.2 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 24.3x
- ▸PEG: 0.19
- ▸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.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Compass Diversified Holdings shows bullish insider buying and earnings growth accelerating even as revenue declines, but a failed risk-reward gate, no identifiable trading edge in a range-bound setup, and quality below the investability floor keep conviction and position sizing at essentially zero.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The earnings-growth component scores a maximum 10.0 even as revenue-growth notes flag a declining top line of -6%, suggesting margin expansion or cost discipline is lifting profitability despite shrinking sales. Growth breakdown | The earnings-growth score should hold near 10 and margin metrics should continue improving over the next 12 months even if revenue stays soft. | ↓Deteriorating |
| CounterTwo of the last four quarters were large misses (-215%, -102%), so the earnings-growth reading may be an artifact of comparing against a weak prior-year base rather than a durable margin improvement. | ||
Insiders have been net buyers, purchasing a net $372,038 of stock (0.047% of market cap) across 4 buy and 2 sell transactions over the past 90 days, driving a bullish insider signal. Insider breakdown | Insider buying should continue to outweigh selling, keeping the bullish signal intact over the next 12 months. | ↑Improving |
| CounterThe buying is described as only 'modest' relative to market cap, and 2 sell transactions occurred alongside the 4 buys, so the signal is directionally positive but not overwhelming. | ||
The engine's asymmetry gate failed, with a risk-reward ratio of just 0.38 against a 1.5 minimum, reflecting only 4.1% modeled upside against 10.8% downside. Engine gate (failed) | For the gate to clear, the asymmetry ratio needs to climb above 1.5 as upside expands or downside risk narrows over the next 12 months. | ↑Improving |
| CounterOptions-market max pain sits at $17.00, well above the current $10.61 price, suggesting options positioning may imply more upside than the engine's own risk-reward framework currently captures. | ||
The technical setup is range-bound with RSI at a neutral 56 and Bollinger Bands at the mid-band, and the engine's own edge assessment finds no clear trading edge, keeping conviction at none. Edge rationale | If this remains true, expect the stock to continue trading range-bound without a clear directional edge over the next 12 months. | ↑Improving |
| CounterMomentum notes cite rising on-balance volume and price above the 200-day moving average, both constructive signs that could eventually resolve into a clearer directional edge. | ||
Quality sits below the engine's investability floor at 2.9 versus a 4.0 minimum, driven by cash-burning operations (free cash flow at -3% of revenue) and no competitive moat. Quality breakdown | Quality should rise above the 4.0 floor as free cash flow turns positive over the next 12 months. | ↑Improving |
| CounterA current ratio of 9.0 signals very strong liquidity and the Piotroski F-score of 6.7 is comparatively solid, suggesting the balance sheet is more resilient than the quality score alone implies. | ||
The earnings-growth component scores a maximum 10.0 even as revenue-growth notes flag a declining top line of -6%, suggesting margin expansion or cost discipline is lifting profitability despite shrinking sales.
↓DeterioratingGrowth breakdown
- Expectation
- The earnings-growth score should hold near 10 and margin metrics should continue improving over the next 12 months even if revenue stays soft.
CounterTwo of the last four quarters were large misses (-215%, -102%), so the earnings-growth reading may be an artifact of comparing against a weak prior-year base rather than a durable margin improvement.
Insiders have been net buyers, purchasing a net $372,038 of stock (0.047% of market cap) across 4 buy and 2 sell transactions over the past 90 days, driving a bullish insider signal.
↑ImprovingInsider breakdown
- Expectation
- Insider buying should continue to outweigh selling, keeping the bullish signal intact over the next 12 months.
CounterThe buying is described as only 'modest' relative to market cap, and 2 sell transactions occurred alongside the 4 buys, so the signal is directionally positive but not overwhelming.
The engine's asymmetry gate failed, with a risk-reward ratio of just 0.38 against a 1.5 minimum, reflecting only 4.1% modeled upside against 10.8% downside.
↑ImprovingEngine gate (failed)
- Expectation
- For the gate to clear, the asymmetry ratio needs to climb above 1.5 as upside expands or downside risk narrows over the next 12 months.
CounterOptions-market max pain sits at $17.00, well above the current $10.61 price, suggesting options positioning may imply more upside than the engine's own risk-reward framework currently captures.
The technical setup is range-bound with RSI at a neutral 56 and Bollinger Bands at the mid-band, and the engine's own edge assessment finds no clear trading edge, keeping conviction at none.
↑ImprovingEdge rationale
- Expectation
- If this remains true, expect the stock to continue trading range-bound without a clear directional edge over the next 12 months.
CounterMomentum notes cite rising on-balance volume and price above the 200-day moving average, both constructive signs that could eventually resolve into a clearer directional edge.
Quality sits below the engine's investability floor at 2.9 versus a 4.0 minimum, driven by cash-burning operations (free cash flow at -3% of revenue) and no competitive moat.
↑ImprovingQuality breakdown
- Expectation
- Quality should rise above the 4.0 floor as free cash flow turns positive over the next 12 months.
CounterA current ratio of 9.0 signals very strong liquidity and the Piotroski F-score of 6.7 is comparatively solid, suggesting the balance sheet is more resilient than the quality score alone implies.
Per-dimension breakdown
Quality
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 1.4 |
| Gross margin | 4.9 |
| Op margin | 2.7 |
| Net margin | 0.0 |
| Current ratio | 7.8 |
| FCF quality | 6.0 |
| Moat | 3.2 |
| Piotroski F | 6.7 |
- ▸FCF-positive but moderate margins (FCF margin 12%, FCF yield 23.0%)
- ▸No competitive moat
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 10.0 |
- ▸Declining revenue: -11%
Momentum
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.2 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Overbought (RSI 76)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.4 |
| Analyst rating | 5.0 |
| Price target | 8.8 |
- ▸Analyst upside: 33%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider buying — $29,200 (0.003% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.6 |
| quality rank | 0.8 |
| growth rank | 0.6 |
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 3.5 |
| 52w position | 8.2 |
Risk (lower is worse)
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.5 |
| days to cover | 2.5 |
| volatility | 1.6 |
| put call | 1.5 |
| implied vol | 0.0 |
| debt equity | 2.4 |
| news risk | 6.0 |
- ▸Elevated put/call: 1.78
- ▸High IV: 111%
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.8 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 9.4%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (7)
- MOMENTUM:6.6>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.60
- EARNINGS_PROXIMITY:89d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.9<1.5@spot
Warning (0)
none
Reward-to-Risk
0.86
Upside
+13.0%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($0.9B) below institutional reach
SuitabilityAggressive — MCap $0.9B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's 0.9<1.5@spot outcome against Insider at 7.3 and asymmetric R:R of 0.86.
The strongest dimensions are Insider at 7.3, Value at 7.1, and Momentum at 6.6; the weakest are Peer rank at 2.7, Risk (lower is worse) at 2.9, and Quality at 3.6. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 0.86 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Growth Despite Revenue Decline
Trip ifEarnings-growth score falls below 5.0 from the current 10.0 as year-over-year comparisons normalize.
- P2Bullish Insider Buying
Trip ifNet insider selling exceeds $1 million over a 90-day window, reversing the current bullish signal.
- P3Failed Asymmetry Gate
Trip ifAsymmetry ratio rises above 1.5, clearing the engine's gate from the current 0.38 reading.
- P4No Identifiable Edge In Range Bound Setup
Trip ifMomentum score rises above 7.5 as the setup breaks out of its current range-bound pattern.
- P5Quality Below Investability Floor
Trip ifQuality score rises above 4.0 from the current 2.9.