Intrinsic value of Compass Diversified Holdings - CODI

Previous Close

$18.15

  Intrinsic Value

$12.32

stock screener

  Rating & Target

sell

-32%

  Value-price divergence*

-97%

Previous close

$18.15

 
Intrinsic value

$12.32

 
Up/down potential

-32%

 
Rating

sell

 
Value-price divergence*

-97%

Our model is not good at valuating stocks of financial companies, such as CODI.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CODI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  34.34
  43.50
  39.65
  36.19
  33.07
  30.26
  27.73
  25.46
  23.41
  21.57
  19.92
  18.42
  17.08
  15.87
  14.79
  13.81
  12.93
  12.13
  11.42
  10.78
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
Revenue, $m
  978
  1,403
  1,960
  2,669
  3,552
  4,626
  5,909
  7,414
  9,150
  11,124
  13,339
  15,797
  18,495
  21,431
  24,600
  27,997
  31,616
  35,452
  39,501
  43,759
  48,222
  52,891
  57,763
  62,841
  68,128
  73,626
  79,343
  85,283
  91,457
  97,872
  104,541
Variable operating expenses, $m
 
  1,285
  1,775
  2,400
  3,177
  4,124
  5,254
  6,579
  8,108
  9,846
  11,797
  13,912
  16,289
  18,874
  21,665
  24,656
  27,844
  31,222
  34,788
  38,538
  42,469
  46,580
  50,872
  55,344
  60,000
  64,842
  69,876
  75,109
  80,545
  86,196
  92,068
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  959
  1,285
  1,775
  2,400
  3,177
  4,124
  5,254
  6,579
  8,108
  9,846
  11,797
  13,912
  16,289
  18,874
  21,665
  24,656
  27,844
  31,222
  34,788
  38,538
  42,469
  46,580
  50,872
  55,344
  60,000
  64,842
  69,876
  75,109
  80,545
  86,196
  92,068
Operating income, $m
  19
  118
  185
  269
  375
  503
  656
  835
  1,042
  1,278
  1,542
  1,885
  2,207
  2,557
  2,935
  3,340
  3,772
  4,230
  4,713
  5,221
  5,753
  6,310
  6,892
  7,497
  8,128
  8,784
  9,466
  10,175
  10,911
  11,677
  12,472
EBITDA, $m
  105
  237
  331
  451
  600
  782
  999
  1,253
  1,547
  1,881
  2,255
  2,671
  3,127
  3,623
  4,159
  4,733
  5,345
  5,993
  6,678
  7,398
  8,152
  8,941
  9,765
  10,623
  11,517
  12,447
  13,413
  14,417
  15,461
  16,546
  17,673
Interest expense (income), $m
  23
  29
  50
  78
  113
  157
  210
  274
  349
  435
  533
  642
  764
  898
  1,044
  1,201
  1,370
  1,549
  1,740
  1,940
  2,152
  2,373
  2,605
  2,846
  3,098
  3,361
  3,633
  3,917
  4,212
  4,518
  4,836
Earnings before tax, $m
  63
  89
  134
  191
  261
  346
  446
  561
  694
  843
  1,010
  1,242
  1,442
  1,659
  1,891
  2,139
  2,402
  2,680
  2,973
  3,280
  3,602
  3,937
  4,287
  4,651
  5,030
  5,424
  5,833
  6,258
  6,700
  7,159
  7,636
Tax expense, $m
  9
  24
  36
  52
  71
  93
  120
  152
  187
  228
  273
  335
  389
  448
  511
  578
  649
  724
  803
  886
  972
  1,063
  1,157
  1,256
  1,358
  1,464
  1,575
  1,690
  1,809
  1,933
  2,062
Net income, $m
  55
  65
  98
  140
  191
  252
  325
  410
  507
  616
  737
  907
  1,053
  1,211
  1,380
  1,562
  1,754
  1,957
  2,170
  2,395
  2,629
  2,874
  3,129
  3,395
  3,672
  3,959
  4,258
  4,568
  4,891
  5,226
  5,574

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  40
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,777
  2,493
  3,481
  4,741
  6,308
  8,217
  10,496
  13,169
  16,252
  19,758
  23,693
  28,058
  32,851
  38,066
  43,695
  49,728
  56,156
  62,970
  70,162
  77,724
  85,652
  93,944
  102,599
  111,619
  121,008
  130,775
  140,928
  151,480
  162,446
  173,841
  185,685
Adjusted assets (=assets-cash), $m
  1,737
  2,493
  3,481
  4,741
  6,308
  8,217
  10,496
  13,169
  16,252
  19,758
  23,693
  28,058
  32,851
  38,066
  43,695
  49,728
  56,156
  62,970
  70,162
  77,724
  85,652
  93,944
  102,599
  111,619
  121,008
  130,775
  140,928
  151,480
  162,446
  173,841
  185,685
Revenue / Adjusted assets
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
Average production assets, $m
  574
  824
  1,150
  1,567
  2,085
  2,716
  3,469
  4,352
  5,371
  6,530
  7,830
  9,273
  10,857
  12,580
  14,440
  16,434
  18,558
  20,810
  23,187
  25,686
  28,306
  31,047
  33,907
  36,888
  39,991
  43,219
  46,574
  50,061
  53,685
  57,451
  61,365
Working capital, $m
  250
  310
  433
  590
  785
  1,022
  1,306
  1,638
  2,022
  2,458
  2,948
  3,491
  4,087
  4,736
  5,437
  6,187
  6,987
  7,835
  8,730
  9,671
  10,657
  11,689
  12,766
  13,888
  15,056
  16,271
  17,535
  18,848
  20,212
  21,630
  23,104
Total debt, $m
  557
  950
  1,471
  2,134
  2,961
  3,967
  5,168
  6,576
  8,201
  10,049
  12,122
  14,423
  16,949
  19,697
  22,663
  25,842
  29,230
  32,821
  36,611
  40,597
  44,775
  49,145
  53,706
  58,459
  63,407
  68,554
  73,905
  79,466
  85,245
  91,250
  97,492
Total liabilities, $m
  921
  1,314
  1,835
  2,498
  3,325
  4,331
  5,532
  6,940
  8,565
  10,413
  12,486
  14,787
  17,313
  20,061
  23,027
  26,206
  29,594
  33,185
  36,975
  40,961
  45,139
  49,509
  54,070
  58,823
  63,771
  68,918
  74,269
  79,830
  85,609
  91,614
  97,856
Total equity, $m
  856
  1,179
  1,647
  2,242
  2,984
  3,887
  4,965
  6,229
  7,687
  9,346
  11,207
  13,272
  15,539
  18,005
  20,668
  23,521
  26,562
  29,785
  33,186
  36,763
  40,514
  44,436
  48,529
  52,796
  57,237
  61,857
  66,659
  71,650
  76,837
  82,227
  87,829
Total liabilities and equity, $m
  1,777
  2,493
  3,482
  4,740
  6,309
  8,218
  10,497
  13,169
  16,252
  19,759
  23,693
  28,059
  32,852
  38,066
  43,695
  49,727
  56,156
  62,970
  70,161
  77,724
  85,653
  93,945
  102,599
  111,619
  121,008
  130,775
  140,928
  151,480
  162,446
  173,841
  185,685
Debt-to-equity ratio
  0.651
  0.810
  0.890
  0.950
  0.990
  1.020
  1.040
  1.060
  1.070
  1.080
  1.080
  1.090
  1.090
  1.090
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
  1.110
Adjusted equity ratio
  0.470
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  55
  65
  98
  140
  191
  252
  325
  410
  507
  616
  737
  907
  1,053
  1,211
  1,380
  1,562
  1,754
  1,957
  2,170
  2,395
  2,629
  2,874
  3,129
  3,395
  3,672
  3,959
  4,258
  4,568
  4,891
  5,226
  5,574
Depreciation, amort., depletion, $m
  86
  119
  147
  182
  226
  279
  343
  418
  504
  603
  713
  786
  920
  1,066
  1,224
  1,393
  1,573
  1,764
  1,965
  2,177
  2,399
  2,631
  2,873
  3,126
  3,389
  3,663
  3,947
  4,242
  4,550
  4,869
  5,200
Funds from operations, $m
  128
  184
  245
  322
  417
  532
  668
  828
  1,011
  1,218
  1,450
  1,693
  1,973
  2,277
  2,604
  2,954
  3,326
  3,720
  4,135
  4,571
  5,028
  5,505
  6,003
  6,521
  7,061
  7,622
  8,205
  8,811
  9,440
  10,095
  10,775
Change in working capital, $m
  17
  94
  123
  157
  195
  238
  284
  333
  384
  436
  490
  543
  596
  649
  700
  751
  800
  848
  895
  941
  986
  1,032
  1,077
  1,122
  1,168
  1,215
  1,263
  1,313
  1,364
  1,418
  1,474
Cash from operations, $m
  111
  90
  122
  165
  222
  294
  385
  495
  627
  782
  960
  1,149
  1,377
  1,628
  1,904
  2,204
  2,527
  2,873
  3,241
  3,630
  4,042
  4,474
  4,926
  5,399
  5,893
  6,407
  6,942
  7,498
  8,076
  8,677
  9,301
Maintenance CAPEX, $m
  0
  -49
  -70
  -97
  -133
  -177
  -230
  -294
  -369
  -455
  -553
  -664
  -786
  -920
  -1,066
  -1,224
  -1,393
  -1,573
  -1,764
  -1,965
  -2,177
  -2,399
  -2,631
  -2,873
  -3,126
  -3,389
  -3,663
  -3,947
  -4,242
  -4,550
  -4,869
New CAPEX, $m
  -24
  -250
  -327
  -416
  -518
  -631
  -753
  -883
  -1,019
  -1,159
  -1,300
  -1,443
  -1,584
  -1,723
  -1,860
  -1,994
  -2,124
  -2,252
  -2,377
  -2,499
  -2,620
  -2,740
  -2,860
  -2,981
  -3,103
  -3,228
  -3,355
  -3,487
  -3,624
  -3,766
  -3,914
Cash from investing activities, $m
  -363
  -299
  -397
  -513
  -651
  -808
  -983
  -1,177
  -1,388
  -1,614
  -1,853
  -2,107
  -2,370
  -2,643
  -2,926
  -3,218
  -3,517
  -3,825
  -4,141
  -4,464
  -4,797
  -5,139
  -5,491
  -5,854
  -6,229
  -6,617
  -7,018
  -7,434
  -7,866
  -8,316
  -8,783
Free cash flow, $m
  -252
  -208
  -275
  -349
  -429
  -513
  -598
  -682
  -761
  -832
  -894
  -957
  -993
  -1,015
  -1,022
  -1,014
  -990
  -952
  -900
  -834
  -755
  -666
  -565
  -455
  -337
  -210
  -77
  64
  210
  361
  518
Issuance/(repayment) of debt, $m
  248
  399
  521
  664
  826
  1,006
  1,201
  1,408
  1,625
  1,848
  2,074
  2,300
  2,526
  2,748
  2,966
  3,179
  3,388
  3,591
  3,790
  3,985
  4,178
  4,370
  4,561
  4,753
  4,948
  5,147
  5,351
  5,561
  5,779
  6,005
  6,242
Issuance/(repurchase) of shares, $m
  84
  292
  369
  456
  551
  650
  753
  854
  952
  1,043
  1,124
  1,158
  1,214
  1,256
  1,282
  1,292
  1,287
  1,266
  1,231
  1,182
  1,121
  1,048
  964
  871
  770
  660
  545
  423
  296
  164
  28
Cash from financing (excl. dividends), $m  
  287
  691
  890
  1,120
  1,377
  1,656
  1,954
  2,262
  2,577
  2,891
  3,198
  3,458
  3,740
  4,004
  4,248
  4,471
  4,675
  4,857
  5,021
  5,167
  5,299
  5,418
  5,525
  5,624
  5,718
  5,807
  5,896
  5,984
  6,075
  6,169
  6,270
Total cash flow (excl. dividends), $m
  32
  482
  616
  771
  948
  1,143
  1,355
  1,581
  1,816
  2,059
  2,304
  2,502
  2,747
  2,989
  3,226
  3,458
  3,684
  3,905
  4,122
  4,334
  4,544
  4,752
  4,960
  5,169
  5,381
  5,597
  5,819
  6,047
  6,284
  6,531
  6,788
Retained Cash Flow (-), $m
  -30
  -357
  -468
  -596
  -741
  -903
  -1,078
  -1,264
  -1,458
  -1,658
  -1,861
  -2,065
  -2,267
  -2,467
  -2,662
  -2,854
  -3,041
  -3,223
  -3,402
  -3,577
  -3,750
  -3,922
  -4,094
  -4,266
  -4,441
  -4,620
  -4,802
  -4,991
  -5,187
  -5,390
  -5,602
Prev. year cash balance distribution, $m
 
  34
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  159
  148
  175
  206
  240
  277
  317
  358
  400
  443
  437
  480
  522
  563
  604
  643
  682
  720
  757
  794
  830
  866
  903
  940
  978
  1,016
  1,056
  1,098
  1,141
  1,186
Discount rate, %
 
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.51
  9.99
  10.49
  11.01
  11.57
  12.14
  12.75
  13.39
  14.06
  14.76
  15.50
  16.27
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.04
  25.25
  26.51
  27.83
  29.22
PV of cash for distribution, $m
 
  149
  128
  140
  150
  159
  165
  168
  167
  163
  156
  131
  121
  110
  97
  84
  71
  59
  48
  38
  29
  22
  16
  12
  8
  6
  4
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100
  78.5
  63.2
  52.1
  43.8
  37.5
  32.6
  28.8
  25.7
  23.3
  21.3
  19.7
  18.4
  17.4
  16.4
  15.7
  15.1
  14.5
  14.1
  13.7
  13.4
  13.1
  12.9
  12.7
  12.6
  12.5
  12.4
  12.3
  12.3
  12.3
  12.3

Compass Diversified Holdings (the Trust) and Compass Group Diversified Holdings, LLC, (the Company), acquires and manages small and middle-market businesses. The Company operates through segments include Acquisition Corp. (5.11 Tactical), The Ergo Baby Carrier, Inc. (Ergobaby), Liberty Safe and Security Products, Inc. (Liberty), Fresh Hemp Foods Ltd. (Manitoba Harvest), Compass AC Holdings, Inc. (ACI), AMT Acquisition Corporation (Arnold), Clean Earth Holdings, Inc. (Clean Earth), and Sterno Products, LLC (Sterno) segments. The Company categorizes the businesses into separate groups of businesses, such as branded consumer businesses and niche industrial businesses. The Company also owns a non-controlling interest in Fox Factory Holding Corp. (FOX). Compass Group Management LLC, (CGM or the Manager), manages the day to day operations of the Company and oversees the management and operations of its businesses pursuant to a management services agreement (MSA).

FINANCIAL RATIOS  of  Compass Diversified Holdings (CODI)

Valuation Ratios
P/E Ratio 19.8
Price to Sales 1.1
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow 12.5
Growth Rates
Sales Growth Rate 34.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate 8.4%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 64.4%
Total Debt to Equity 65.1%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 13.1%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 15.2%
Return On Equity 6.5%
Return On Equity - 3 Yr. Avg. 24%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 33.4%
Gross Margin - 3 Yr. Avg. 32.9%
EBITDA Margin 17.6%
EBITDA Margin - 3 Yr. Avg. 27.9%
Operating Margin 1.9%
Oper. Margin - 3 Yr. Avg. 18.3%
Pre-Tax Margin 6.4%
Pre-Tax Margin - 3 Yr. Avg. 17.6%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 23.9%
Effective Tax Rate 14.3%
Eff/ Tax Rate - 3 Yr. Avg. 26.2%
Payout Ratio 141.8%

CODI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CODI stock intrinsic value calculation we used $978 million for the last fiscal year's total revenue generated by Compass Diversified Holdings. The default revenue input number comes from 2016 income statement of Compass Diversified Holdings. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CODI stock valuation model: a) initial revenue growth rate of 43.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.1%, whose default value for CODI is calculated based on our internal credit rating of Compass Diversified Holdings, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Compass Diversified Holdings.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CODI stock the variable cost ratio is equal to 93.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CODI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.3% for Compass Diversified Holdings.

Corporate tax rate of 27% is the nominal tax rate for Compass Diversified Holdings. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CODI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CODI are equal to 58.7%.

Life of production assets of 11.8 years is the average useful life of capital assets used in Compass Diversified Holdings operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CODI is equal to 22.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $856 million for Compass Diversified Holdings - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 61.095 million for Compass Diversified Holdings is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Compass Diversified Holdings at the current share price and the inputted number of shares is $1.1 billion.

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COMPANY NEWS

▶ Should You Buy Compass Diversified Holdings LLC (CODI) Now?   [Sep-13-17 01:37PM  Simply Wall St.]
▶ Sterno Products Acquires sevenOKs   [Aug-31-17 01:00PM  GlobeNewswire]
▶ Five Yields Up To 10% With 40% Price Upside, Too   [Apr-09-17 08:17AM  Forbes]
▶ New Strong Sell Stocks for March 6th   [Mar-06-17 10:10AM  Zacks]
▶ 5.11 Tactical® Creates Revolutionary Tactical Jeans   [Jan-17-17 02:26PM  PR Newswire]
▶ Baby Berkshire Stock With An 8.3% Dividend Yield   [Oct-20-16 12:03PM  at Forbes]
Financial statements of CODI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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