Compass Diversified (NYSE: CODI) Prepares for Quarterly Earnings Amidst Challenges

• Compass Diversified anticipates an earnings per share (EPS) of $0.45 and revenue of approximately $567.42 million for the upcoming quarter.

• The company faces significant challenges, including a high price-to-earnings (P/E) ratio of 66.77 and a class-action lawsuit related to accounting irregularities.

• Despite these issues, CODI maintains a strong liquidity position with a current ratio of 4.07, though it has a negative enterprise value to operating cash flow ratio of -32.48.

Compass Diversified (NYSE: CODI), a private equity firm based in Connecticut, is preparing to release its quarterly earnings on June 25, 2025. Wall Street anticipates an earnings per share (EPS) of $0.45 and revenue of approximately $567.42 million. CODI operates by acquiring and managing a diverse portfolio of businesses, providing them with strategic guidance and financial support.

The company is currently navigating through significant challenges. A key director, Gordon M. Burns, resigned from the board on June 7, 2025, due to other commitments. This resignation coincides with a sharp decline in CODI's stock price and a class-action lawsuit related to accounting irregularities at one of its portfolio companies, as highlighted by Hagens Berman.

CODI's financial metrics reveal a complex picture. The company has a high price-to-earnings (P/E) ratio of 66.77, indicating that investors are paying a premium for its earnings. However, the price-to-sales ratio is low at 0.22, suggesting that the market values the company modestly relative to its sales. The enterprise value to sales ratio is 1.00, reflecting the company's total value compared to its sales.

Despite these challenges, CODI maintains a strong liquidity position with a current ratio of 4.07, indicating it has ample current assets to cover its current liabilities. However, the enterprise value to operating cash flow ratio is negative at -32.48, which may signal difficulties in generating cash flow relative to its enterprise value. The debt-to-equity ratio stands at 1.37, showing a significant reliance on debt to finance its assets.

The ongoing class-action lawsuit, with a lead plaintiff deadline of July 8, 2025, adds further pressure on CODI. The lawsuit covers a class period from May 1, 2024, to May 7, 2025, and is linked to financial irregularities. Investors who have incurred significant losses are encouraged to report their losses, as the company grapples with these financial and legal challenges.