Compass Diversified (NASDAQ: PRPL) and Purple Innovation (NASDAQ:PRPL) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, risk, analyst recommendations, profitability, valuation and earnings.

Profitability

This table compares Compass Diversified and Purple Innovation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Compass Diversified 3.45% 2.47% 0.97%
Purple Innovation N/A -36.07% -3.06%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Compass Diversified and Purple Innovation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Compass Diversified 0 0 0 0 N/A
Purple Innovation 0 0 1 0 3.00

Purple Innovation has a consensus target price of $8.00, indicating a potential upside of 43.63%. Given Purple Innovation’s higher possible upside, analysts plainly believe Purple Innovation is more favorable than Compass Diversified.

Institutional and Insider Ownership

32.0% of Compass Diversified shares are owned by institutional investors. Comparatively, 12.7% of Purple Innovation shares are owned by institutional investors. 2.4% of Compass Diversified shares are owned by company insiders. Comparatively, 65.8% of Purple Innovation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Compass Diversified has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500. Comparatively, Purple Innovation has a beta of -0.24, indicating that its share price is 124% less volatile than the S&P 500.

Dividends

Compass Diversified pays an annual dividend of $1.44 per share and has a dividend yield of 8.1%. Purple Innovation does not pay a dividend.

Earnings and Valuation

This table compares Compass Diversified and Purple Innovation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Compass Diversified $1.27 billion 0.84 $27.99 million N/A N/A
Purple Innovation N/A N/A $800,000.00 N/A N/A

Compass Diversified has higher revenue and earnings than Purple Innovation.

Summary

Compass Diversified beats Purple Innovation on 8 of the 11 factors compared between the two stocks.

About Compass Diversified

Compass Diversified Holdings LLC is a private equity firm specializing in acquisitions, buyouts, industry consolidation, recapitalization, and middle market investments. It seeks to invest in niche industrial or branded consumer companies, manufacturing, distribution, consumer products, business services sector, safety & security, electronic components, food, foodservice. The firm prefers to invest in companies based in North America. It seeks to invest between $4 million and $700 million in companies with cash flows between $10 million and $450 million, enterprise values between $100 million and $500 million, and an EBITDA between $5 million and $75 million. It seeks to acquire controlling ownership interests in its portfolio companies and can make additional platform acquisitions. The firm prefer to have majority, and minority stake in companies. The firm invests through its balance sheet and typically holds investments between five to seven years. Compass Group Management LLC is the external manager of the Compass Diversified Holdings LLC and manages day-to-day business and operations of firm. Compass Diversified Holdings LLC was founded in 2005 and is based in Westport, Connecticut with an additional office in Irvine, California.

About Purple Innovation

Purple Innovation, Inc. designs and manufactures mattresses, pillows, and cushions. The company markets and sells its products through direct-to-consumer and retail channels. Purple Innovation, Inc. was founded in 2010 and is headquartered in Alpine, Utah.

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