Investors are evaluating the financial performance of two small-cap finance companies: Compass Diversified (NYSE: CODI) and BlackRock MuniVest Fund (NYSE: MVF). A comprehensive comparison reveals significant differences in profitability, institutional ownership, dividends, and overall risk.
Profitability and Valuation
In terms of profitability, Compass Diversified outperforms BlackRock MuniVest Fund across key metrics. The net margins, return on equity, and return on assets indicate stronger financial health for Compass. This advantage is further reflected in their revenue and earnings per share (EPS), with Compass yielding higher figures than its counterpart.
The valuation of these companies also highlights the disparity in performance. Analysts report that Compass Diversified has a consensus price target of $18.00, suggesting a potential upside of 140.80%. This optimistic outlook indicates that analysts favor Compass over BlackRock in terms of future growth potential.
Institutional and Insider Ownership
Institutional investment plays a crucial role in assessing the confidence in a company. Approximately 72.7% of Compass Diversified shares are held by institutional investors, compared to 48.2% for BlackRock MuniVest Fund. This substantial institutional ownership for Compass suggests that endowments, hedge funds, and large asset managers view it as a promising long-term investment.
Insider ownership also reflects the level of confidence from those closest to the company. 1.8% of Compass shares are held by company insiders, while 1.0% of BlackRock MuniVest Fund shares are similarly owned. Although these percentages may seem low, they indicate a commitment from management that can bolster investor confidence.
Risk and Volatility Analysis
In terms of risk, Compass Diversified presents a higher volatility profile with a beta of 1.06. This figure suggests that its stock is approximately 6% more volatile than the S&P 500 index. In contrast, BlackRock MuniVest Fund has a beta of 0.58, indicating it is 42% less volatile than the market benchmark. Investors seeking stability may prefer BlackRock, while those looking for higher growth, accepting greater risk, might lean towards Compass.
Company Profiles
Compass Diversified, founded in 2006 and headquartered in Westport, Connecticut, specializes in private equity investments. The firm targets niche industrial or branded consumer companies, focusing on manufacturing, distribution, and healthcare industries, among others. Their investment strategy typically involves commitments between $100 million and $800 million in companies with EBITDA ranging from $15 million to $80 million. Compass aims to acquire controlling interests and traditionally holds investments for five to seven years.
On the other hand, BlackRock MuniVest Fund is a closed-ended fixed income mutual fund launched by BlackRock, Inc. on September 29, 1988. Managed by BlackRock Advisors, LLC, the fund primarily invests in long-term municipal obligations that are exempt from federal income taxes. With a focus on securities maturing in over ten years, it provides investors with a tax-efficient income stream.
In summary, Compass Diversified appears to outperform BlackRock MuniVest Fund on multiple fronts, including profitability, institutional backing, and growth potential. With a stronger consensus rating and a more favorable risk profile, Compass may be the more appealing option for investors looking at these two small-cap finance entities.
