Compass Diversified (CODI) Stock Falling Today After Announcing Share Offering Pricing

NEW YORK (TheStreet) -- Compass Diversified Holdings (CODI) announced the pricing of its offering of 6 million trust shares at $17.50 per share on Tuesday.

Shares of Compass Diversified Holdings are slumping by 8.63% to $16.72 on heavy volume in mid-morning trading today.

The company, which operates by acquiring controlling interests in businesses that it believes operates in industries with long-term macroeconomic growth opportunities, said it expects to receive approximately $105 million of gross proceeds from the offering.

Underwriters will be granted a 30-day option to acquire an additional 900,000 trust shares from Compass Diversified Holdings. The offering is expected to close on or about November 14.

Separately, TheStreet Ratings team rates COMPASS DIVERSIFIED HOLDINGS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate COMPASS DIVERSIFIED HOLDINGS (CODI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • COMPASS DIVERSIFIED HOLDINGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COMPASS DIVERSIFIED HOLDINGS turned its bottom line around by earning $1.07 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $1.07).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 1105.1% when compared to the same quarter one year prior, rising from -$0.57 million to $5.72 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.3%. Since the same quarter one year prior, revenues slightly increased by 9.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Financial Services industry and the overall market, COMPASS DIVERSIFIED HOLDINGS's return on equity exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: CODI Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

More from Markets

Stocks Fall Hard as Earnings Disappoint, Caterpillar Tumbles

Stocks Fall Hard as Earnings Disappoint, Caterpillar Tumbles

Jim Cramer: If You're Afraid of the 10-Year Yield, Go to Cash

Jim Cramer: If You're Afraid of the 10-Year Yield, Go to Cash

Eli Lilly CEO Expresses Confidence in New Rheumatoid Arthritis Drug

Eli Lilly CEO Expresses Confidence in New Rheumatoid Arthritis Drug

Video: Jim Cramer on Rising Interest Rates, Trade Worries & Caterpillar

Video: Jim Cramer on Rising Interest Rates, Trade Worries & Caterpillar

Apple Suppliers Slide After European, Asian Chipmakers Echo Smartphone Concerns

Apple Suppliers Slide After European, Asian Chipmakers Echo Smartphone Concerns