Contrasting American Bitcoin (NASDAQ:ABTC) and Compass Diversified (NYSE:CODI)

Compass Diversified (NYSE:CODI) and American Bitcoin (NASDAQ:ABTC) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Insider and Institutional Ownership

72.7% of Compass Diversified shares are owned by institutional investors. Comparatively, 10.2% of American Bitcoin shares are owned by institutional investors. 1.6% of Compass Diversified shares are owned by company insiders. Comparatively, 2.6% of American Bitcoin shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Compass Diversified	-5.38%	-10.36%	-0.10%
American Bitcoin	-71.75%	-29.89%	-15.52%

Analyst Ratings

This is a breakdown of current ratings and target prices for Compass Diversified and American Bitcoin, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Compass Diversified	1	2	3	0	2.33
American Bitcoin	1	1	4	0	2.50

Compass Diversified currently has a consensus price target of $16.50, suggesting a potential upside of 51.79%. American Bitcoin has a consensus price target of $37.50, suggesting a potential upside of 385.12%. Given American Bitcoin’s stronger consensus rating and higher possible upside, analysts clearly believe American Bitcoin is more favorable than Compass Diversified.

Volatility & Risk

Compass Diversified has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500. Comparatively, American Bitcoin has a beta of 3.96, indicating that its stock price is 296% more volatile than the S&P 500.

Valuation & Earnings

This table compares Compass Diversified and American Bitcoin”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Compass Diversified	$1.87 billion	0.44	-$226.41 million	($2.17)	-5.01
American Bitcoin	$185.16 million	3.04	-$153.17 million	($3.05)	-2.53

American Bitcoin has lower revenue, but higher earnings than Compass Diversified. Compass Diversified is trading at a lower price-to-earnings ratio than American Bitcoin, indicating that it is currently the more affordable of the two stocks.

Summary

American Bitcoin beats Compass Diversified on 8 of the 14 factors compared between the two stocks.

About Compass Diversified

Compass Diversified is a private equity firm specializing in add on acquisitions, buyouts, industry consolidation, recapitalization, late stage and middle market investments. It seeks to invest in niche industrial or branded consumer companies, manufacturing, distribution, consumer products, business services sector, healthcare, safety & security, electronic components, food and foodservice. The firm prefers to invest in companies based in North America. It seeks to invest between $100 million and $800 million in companies with an EBITDA between $15 million to $80 million. It seeks to acquire controlling ownership interests in its portfolio companies and can make additional platform acquisitions. The firm prefer to have majority stake in companies. The firm invests through its balance sheet and typically holds investments between five to seven years. Compass Diversified was founded in 2006 and is based in Westport, Connecticut with an additional office in Costa Mesa, California.

About American Bitcoin

Gryphon Digital Mining is an innovative venture in the bitcoin space. Gryphon Digital Mining, formerly known as Akerna Corp., is based in DENVER.