Comparing Orix Corp Ads (NYSE:IX) and Compass Diversified (NYSE:CODI)

Orix Corp Ads (NYSE:IX) and Compass Diversified (NYSE:CODI) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

Earnings and Valuation

This table compares Orix Corp Ads and Compass Diversified”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orix Corp Ads	$22.13 billion	1.87	$2.95 billion	$3.62	10.31
Compass Diversified	$1.79 billion	0.47	-$226.41 million	($2.17)	-5.20

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

Dividends

Orix Corp Ads pays an annual dividend of $0.58 per share and has a dividend yield of 1.6%. Compass Diversified pays an annual dividend of $1.00 per share and has a dividend yield of 8.9%. Orix Corp Ads pays out 16.0% of its earnings in the form of a dividend. Compass Diversified pays out -46.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Compass Diversified is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Orix Corp Ads and Compass Diversified’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Orix Corp Ads	18.02%	13.11%	3.38%
Compass Diversified	-5.38%	-10.36%	-0.10%

Institutional and Insider Ownership

1.7% of Orix Corp Ads shares are owned by institutional investors. Comparatively, 72.7% of Compass Diversified shares are owned by institutional investors. 0.1% of Orix Corp Ads shares are owned by company insiders. Comparatively, 1.6% of Compass Diversified shares are owned by company 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.

Analyst Ratings

This is a summary of recent ratings for Orix Corp Ads and Compass Diversified, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orix Corp Ads	0	1	1	0	2.50
Compass Diversified	1	2	4	0	2.43

Compass Diversified has a consensus target price of $17.00, suggesting a potential upside of 50.67%. Given Compass Diversified’s higher possible upside, analysts plainly believe Compass Diversified is more favorable than Orix Corp Ads.

Risk and Volatility

Orix Corp Ads has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500. Comparatively, Compass Diversified has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500.

Summary

Orix Corp Ads beats Compass Diversified on 9 of the 16 factors compared between the two stocks.

About Orix Corp Ads

ORIX Corporation provides diversified financial services in Japan, the United States, Asia, Europe, Australasia, and the Middle East. The company's Corporate Financial Services and Maintenance Leasing segment is involved in the finance and fee; leasing and rental of automobiles, electronic measuring instruments, and ICT-related equipment businesses; and provision of life insurance and environment and energy-related products and services. Its Real Estate segment develops, rents, and manages real estate properties; operates facilities; real estate asset management; manages residential condominiums and office building; and provides construction contracting, real estate brokerage, and real estate investment advisory services, as well as operates hotels and Japanese inns. The company's PE Investment and Concession segment engages in the private equity (PE) investment and concession businesses. Its Environment and Energy segment provides renewable energy; ESCO; retails electric power; sells solar panels and battery electricity storage systems; and recycling and waste management services, as well as generates solar power. The company's Insurance segment sells life insurance products through agents, banks, and other financial institutions, as well as face-to-face and online. Its Banking and Credit segment provides banking and consumer finance services. The company's Aircraft and Ships segment engages in the aircraft leasing and management, and ship-related finance and investment businesses. Its ORIX USA segment offers finance, investment, and asset management services. The company's ORIX Europe segment provides equity and fixed income asset management services. Its Asia and Australia segment offers finance and investment businesses. The company was formerly known as Orient Leasing Co., Ltd. and changed its name to ORIX Corporation in 1989. ORIX Corporation was incorporated in 1950 and is headquartered in Tokyo, Japan.

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.