Financial Comparison: Compass Diversified (NYSE:CODI) & Oxford Square Capital (NASDAQ:OXSQ)

Oxford Square Capital (NASDAQ:OXSQ) and Compass Diversified (NYSE:CODI) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.

Profitability

This table compares Oxford Square Capital and Compass Diversified’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oxford Square Capital	-93.65%	14.41%	6.81%
Compass Diversified	-5.38%	-10.36%	-0.10%

Institutional & Insider Ownership

6.4% of Oxford Square Capital shares are held by institutional investors. Comparatively, 72.7% of Compass Diversified shares are held by institutional investors. 6.5% of Oxford Square Capital shares are held by insiders. Comparatively, 1.6% of Compass Diversified shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Oxford Square Capital and Compass Diversified”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oxford Square Capital	$40.34 million	3.39	-$18.73 million	($0.45)	-2.82
Compass Diversified	$1.87 billion	0.45	-$226.41 million	($2.17)	-5.19

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Oxford Square Capital and Compass Diversified, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oxford Square Capital	1	0	0	0	1.00
Compass Diversified	1	2	3	0	2.33

Compass Diversified has a consensus price target of $16.50, suggesting a potential upside of 46.64%. Given Compass Diversified’s stronger consensus rating and higher probable upside, analysts clearly believe Compass Diversified is more favorable than Oxford Square Capital.

Volatility & Risk

Oxford Square Capital has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500. Comparatively, Compass Diversified has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.

About Oxford Square Capital

Oxford Square Capital Corp. is a business development company, operates as a closed-end, non-diversified management investment company. It is a private equity and mezzanine firm. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, common stock and syndicated bank loans. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. Oxford Square Capital Corp., formerly known as TICC Capital Corp., was founded in 2003 and is headquartered in Greenwich, Connecticut.

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.