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Richard Berger
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Mr. Berger is the creator and developer of the YDP screening tool, a chart system and its analysis for screening and monitoring dividend income equity investments. The recipient of Seeking Alpha's Outstanding Performance Award, he also has been Seeking Alpha's #3 ranked Author for Income... More
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  • CODI Numbers Look Good But It Is Time To Tighten Stop-Loss  0 comments
    May 15, 2013 4:41 PM | about stocks: CODI

    Compass Diversified Holdings (NYSE:CODI) latest numbers show that the large downside miss to consensus estimates is nothing to be concerned about. This is just the latest in a long history of such misses on the earnings consensus numbers for the Company as seen on the chart from Seth Jayson's article over on fool.com.

    (click to enlarge)

    The $0.03 EPS represents a return to positive territory and reversal of the prior quarter negative EPS and downtrend. Revenues and margins continued to advance in line with historic uptrends. We can therefore conclude that fundamentally all is just fine. This sentiment is shared by analysts with 4 out of 5 maintaining a buy or strong buy rating and 1 remaining with advice to hold.

    A look at the YPD chart (with EPS added) indicates the stock is near its high valuation at these EPS and dividend distributions with a current mid-day share price of $17.60. This suggests it may be time to tighten stop-loss targets a bit to insure against a sharp decline as seen back in mid 2011.

    CODI Chart

    CODI data by YCharts

    While share prices are very near historic highs, the yield on distribution remains more than 1% below historic low yield rates. This reflects the increase in distribution rate since 2011 and suggests the shares are not in a bubble but may face resistance to further advance and a possible retreat to $15.00 support levels in building a base. Shares may test the $15.50 trading range seen back in February and March. A $14.80 stop-loss looks appropriate for many long term holders targeting dividend income. Those with large paper profits in taxable accounts may be even more flexible and use a $13.45 stop-loss to allow a short term test of the November lows.

    Disclosure: I am long CODI.

    Stocks: CODI
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