Is Compass Diversified Holdings overvalued or undervalued?

Sep 20 2025 06:24 PM IST
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As of May 3, 2023, Compass Diversified Holdings is considered risky and overvalued, with poor financial metrics and a significant negative stock return compared to the S&P 500.
As of 3 May 2023, the valuation grade for Compass Diversified Holdings has moved from very attractive to risky, indicating a significant shift in its perceived investment quality. The company appears to be overvalued given its current metrics, with a Price to Book Value of 0.42, an EV to EBITDA of 5.98, and an EV to Sales ratio of 1.05. In comparison, its peer, which has a similar EV to EBITDA of 5.99, highlights that Compass is not positioned favorably within its industry.

The company's financial performance is concerning, illustrated by a negative ROE of -4.77% and a YTD stock return of -68.37% compared to the S&P 500's positive return of 12.22%. This stark contrast in returns further reinforces the notion that Compass Diversified Holdings is overvalued in the current market environment.
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