Reviewing Royce Otc Micro (NYSE:RMT) & Compass Diversified (NYSE:CODI)

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

Institutional & Insider Ownership

35.0% of Royce Otc Micro shares are held by institutional investors. Comparatively, 72.7% of Compass Diversified shares are held by institutional investors. 0.2% of Royce Otc Micro 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, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

Royce Otc Micro has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500. Comparatively, Compass Diversified has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500.

Earnings and Valuation

This table compares Royce Otc Micro and Compass Diversified”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royce Otc Micro	N/A	N/A	N/A	N/A	N/A
Compass Diversified	$1.87 billion	0.46	-$226.41 million	($3.91)	-2.93

Royce Otc Micro has higher earnings, but lower revenue than Compass Diversified.

Profitability

This table compares Royce Otc Micro and Compass Diversified’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Royce Otc Micro	N/A	N/A	N/A
Compass Diversified	-12.30%	-9.53%	0.06%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Royce Otc Micro and Compass Diversified, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royce Otc Micro	0	0	0	0	0.00
Compass Diversified	1	4	1	0	2.00

Compass Diversified has a consensus price target of $12.75, suggesting a potential upside of 11.40%. Given Compass Diversified’s stronger consensus rating and higher possible upside, analysts plainly believe Compass Diversified is more favorable than Royce Otc Micro.

Summary

Compass Diversified beats Royce Otc Micro on 8 of the 10 factors compared between the two stocks.

About Royce Otc Micro

Royce Micro-Cap Trust, Inc. is a closed-ended equity mutual fund launched and managed Royce & Associates, LLC. It invests in the public equity markets of the United States. The fund seeks to invest in stocks of companies operating across diversified sectors. It primarily invests in value stocks of companies with market capitalization of less than $500 million. The fund benchmarks the performance of its portfolios against Russell 2000 Index. Royce Micro-Cap Trust, Inc was formed on December 14, 1993 and is domiciled in the United States.

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.