Breaking Down CompoSecure, Inc. (CMPO) Financial Health: Key Insights for Investors

You're looking at CompoSecure, Inc. (CMPO) right now, and the story has gotten a lot more complicated than just metal payment cards; it's a high-stakes, multi-billion-dollar play, so you need to look past the non-GAAP numbers to understand the risk. The good news is the core business is defintely strong, with the company raising its full-year 2025 Non-GAAP Net Sales guidance to approximately $463 million and Pro Forma Adjusted EBITDA expected to land between $165 million and $170 million, which shows real operational momentum. But here's the quick math: that robust operational performance is now overshadowed by the announced business combination with Husky Technologies, a deal that values the combined entity at roughly $7.4 billion. Still, you have to reconcile that growth with the GAAP Net Loss (Generally Accepted Accounting Principles Net Loss) of ($174.7 million) reported in Q3 2025, a figure largely driven by non-cash revaluation of liabilities, which is a common but crucial disclosure to parse. The question is whether the operational efficiency gains-like the 730 basis point gross margin expansion in Q3-can justify the premium valuation and the sheer complexity of integrating a massive new business.

Revenue Analysis

You're looking for clarity on where CompoSecure, Inc. (CMPO) actually makes its money, especially with all the noise around their recent strategic moves. The direct takeaway is that their revenue engine is running hot on domestic demand for premium metal payment cards, which drove a strong 13% year-over-year (YoY) sales increase in the third quarter of 2025. This core business is the defintely the backbone.

For the full 2025 fiscal year, CompoSecure, Inc. has raised its Non-GAAP Net Sales guidance to approximately $463 million. This upward revision is a clear signal of confidence, largely fueled by new program wins with both established traditional banks and the fast-moving fintech sector in the US. The company's core offering-metal payment cards-is a premium product that continues to see significant adoption in the domestic market.

When you break down the $120.9 million in Non-GAAP net sales reported for Q3 2025, the geographic split shows a tale of two markets. Domestic sales are the overwhelming revenue driver and growth engine, while international sales introduce volatility.

• Domestic Net Sales: Grew a robust 31% to $105.1 million in Q3 2025.
• International Net Sales: Declined 42% to $15.8 million in Q3 2025.

Here's the quick math: Domestic sales accounted for roughly 87% of the total net sales in the quarter. What this estimate hides is the inherent quarter-to-quarter variability in the smaller international business, which management attributes to the timing of specific customer orders. Still, the domestic strength is more than offsetting international softness.

The most significant near-term change to the revenue structure isn't an organic shift, but the announced business combination with Husky Technologies. This deal, which values the combined entity at approximately $7.4 billion, is a major strategic pivot that will diversify the company's business model beyond just metal cards and Arculus security solutions. While the immediate 2025 revenue is from the existing segments, this acquisition is the clear long-term opportunity for new revenue streams. If you want to dive deeper into who is betting on this strategy, you should check out Exploring CompoSecure, Inc. (CMPO) Investor Profile: Who's Buying and Why?

For a clearer view of the Q3 2025 performance, look at the key metrics:

The operational efficiency gains from the CompoSecure Operating System are also driving profitability, with Non-GAAP Gross Margin expanding significantly to 59.0% in Q3 2025, up from 51.7% in the year-ago period. This margin expansion is just as critical as the top-line growth, showing they aren't just selling more, but they're selling more profitably. Finance: Keep a close watch on the integration costs related to the Husky acquisition, as those will impact the bottom line despite the strong gross margin.

Profitability Metrics

You need to know if CompoSecure, Inc. (CMPO) can translate its premium product sales into real bottom-line results. The short answer is that operationally, the company is showing impressive margin expansion, but you must be mindful of the large, non-cash GAAP net loss that skews the headline numbers.

For the full fiscal year 2025, the company has raised its guidance, projecting Non-GAAP Net Sales of approximately $463 million and Pro Forma Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of between $165 million and $170 million. Using the midpoint of the EBITDA guidance, this translates to an impressive operating profitability, with a Pro Forma Adjusted EBITDA Margin of around 36.2% for the year. This is a clear indicator that the core business is highly profitable, even before accounting for non-cash items like depreciation.

Gross and Operating Profit Trends

The most compelling story in CompoSecure, Inc.'s recent financials is the significant expansion in its gross profit margin. This is not just a one-off event; it's a clear trend driven by operational improvements. In the third quarter of 2025 (Q3 2025), the Non-GAAP Gross Margin reached 59.0% on net sales of $120.9 million. This represents a substantial jump from the 51.7% margin reported in the same quarter a year prior.

This margin expansion is directly tied to the implementation of the 'CompoSecure Operating System,' which management credits for efficiency gains and better cost management. The impact is visible in the Q3 2025 Pro Forma Adjusted EBITDA Margin, which expanded to 39.5%, up 529 basis points year-over-year. Honestly, that kind of margin growth is defintely a strong signal of operational discipline.

• Gross Margin: Expanded to 59.0% in Q3 2025.
• Operating Profitability: Q3 2025 Pro Forma Adjusted EBITDA was $47.7 million.
• Efficiency Driver: The 'CompoSecure Operating System' is key to cost savings.

Net Profitability and Industry Comparison

When you look at net profit, you must distinguish between the GAAP (Generally Accepted Accounting Principles) and Non-GAAP numbers. For Q3 2025, CompoSecure, Inc. reported a GAAP Net Loss of ($174.7 million). This large loss is primarily due to a non-cash revaluation of warrant and earnout liabilities, which is a technical accounting item and not a reflection of core business performance.

The operational reality is better reflected in the Non-GAAP Adjusted Net Income. For instance, in Q2 2025, the Adjusted Net Income was $28.4 million on $119.6 million in sales, yielding a Non-GAAP Net Profit Margin of about 23.7%. Analysts are bullish on the future, forecasting the company's profit margins could rise dramatically from a recent negative level to as high as 79.1% within three years, far outpacing typical industry expectations for margin expansion.

To be fair, the market is already pricing in this growth. The company trades at a Price-To-Sales Ratio of 16.5x, which is significantly above the US Tech industry average of 2x and the peer average of just 0.4x. This premium valuation suggests investors are betting heavily on the sustained success of the margin expansion and rapid revenue growth, which is projected to surge by 37.6% per year. For a deeper look at the company's long-term strategy, check out the Mission Statement, Vision, & Core Values of CompoSecure, Inc. (CMPO).

What this estimate hides is the risk of customer concentration, as a small number of large financial and fintech clients drive much of the top-line growth.

Debt vs. Equity Structure

You want to know how CompoSecure, Inc. (CMPO) is funding its growth-debt or equity-and what that means for your investment. The quick answer is that the company has significantly deleveraged and is currently sitting on a net cash position, but its core debt-to-equity ratio signals a structural issue you need to watch. As of the end of Q3 2025, CompoSecure, Inc. had $190.0 million in total debt, but due to strong cash generation and warrant exercises, it reported a net cash position of $75.3 million.

This is a major shift. Just a year earlier, the company was in a net debt position of $277.3 million. The balance sheet has flipped from net leverage to net liquidity, and that's defintely a positive sign for short-term stability. The total debt of $190.0 million for Q3 2025 is primarily long-term, with the company reporting a net repayment of debt totaling $3.4 million for the period ending June 30, 2025.

Here's the quick math on their leverage and a comparison to the industry:

• CMPO Total Debt (Q3 2025): $190.0 million.
• CMPO Net Cash Position: $75.3 million.
• CMPO Debt-to-Equity Ratio: -1.9.

The -1.9 Debt-to-Equity (D/E) ratio is the part that demands attention. A negative D/E ratio means the company has a shareholder's deficit-its total liabilities exceed its total assets, wiping out shareholders' equity. For a capital-intensive business, a D/E ratio between 1.0 and 2.5 is often normal, and the Credit Services industry median is around 1.19. CompoSecure, Inc.'s negative ratio means it relies entirely on debt and other non-equity financing to cover its asset base, a clear sign of past financial strain, though the recent cash build-up mitigates the immediate risk.

CompoSecure, Inc. has been actively rebalancing its capital structure, favoring equity-linked funding to clean up the balance sheet. The key action in 2025 was the exercise of warrants, which brought in $154.4 million in proceeds. This is a massive injection of equity capital that directly contributed to the current net cash position. While there is no widely publicized formal credit rating from a major agency, the market's view is strong, with analysts maintaining a 'Moderate Buy' consensus.

What this estimate hides is the future capital structure. The announced business combination with Husky Technologies, expected to close in Q1 2026, will fundamentally change the leverage profile. That deal is expected to be funded in part by approximately $2 billion of debt for the combined entity. This is a significant debt load that will likely move the new, larger company back into a net debt position, though the pro forma net leverage is projected to be around 3.5x LTM (Last Twelve Months) Adjusted EBITDA. You can read more on this and other topics in the full post: Breaking Down CompoSecure, Inc. (CMPO) Financial Health: Key Insights for Investors.

The immediate action for you is to model the post-Husky debt service obligations against the projected combined EBITDA of $635 million to ensure the new entity's cash flow remains robust.

Liquidity and Solvency

You need to know if CompoSecure, Inc. (CMPO) has the cash on hand to cover its near-term obligations, and the answer is a definitive yes. The company's liquidity position, based on its Non-GAAP consolidated results as of September 30, 2025 (Q3 2025), is exceptionally strong, marked by a significant shift from a net debt to a net cash position.

The core of this strength is the substantial cash and short-term investments, which totaled $265.3 million. This impressive cash hoard, combined with other current assets, puts their liquidity ratios in a comfort zone well above the typical 1.0 benchmark. This is defintely a green flag for near-term operational stability.

Assessing CompoSecure, Inc.'s Liquidity Ratios

The Current Ratio and Quick Ratio (Acid-Test Ratio) tell us how easily CompoSecure, Inc. can cover its immediate debts. We use the Non-GAAP figures, which consolidate the operating subsidiary for a clearer picture of the business's financial health.

Here's the quick math based on the Q3 2025 Non-GAAP balance sheet figures (in millions of dollars):

• Total Current Assets: $380.7 million
• Total Current Liabilities: $129.2 million
• Inventories, net: $43.7 million

The resulting ratios are a clear indicator of robust liquidity:

A Current Ratio of 2.95 and a Quick Ratio of 2.61 show a high degree of short-term financial flexibility. What this estimate hides is that inventory is a small portion of current assets, meaning the company's liquidity is not heavily reliant on selling its stock of metal cards or components.

Working Capital and Cash Flow Trends

The trend in working capital (Current Assets minus Current Liabilities) is dramatically positive. The Non-GAAP working capital stood at $251.5 million ($380.7M - $129.2M) at the end of Q3 2025, providing a huge buffer for operations and strategic growth. This is a massive improvement over the prior year.

The cash flow statement for the nine months ended September 30, 2025, paints a picture of a company generating cash from its core business and capitalizing on its equity structure:

• Operating Cash Flow (OCF): Net cash provided by operating activities was a strong $91.9 million. This OCF is the lifeblood, confirming the core metal card and security solutions business is highly profitable in cash terms.
• Investing Cash Flow: Net cash used in investing activities was only $(44.2) million. This suggests manageable capital expenditures (CapEx) relative to the cash generated from operations, which is a healthy sign.
• Financing Cash Flow: The major liquidity event was in financing. The company saw a significant cash inflow, primarily driven by $154.4 million in proceeds from warrant exercises. This influx was the key catalyst in shifting the balance sheet from a net debt position of $277.3 million at September 30, 2024, to a net cash position of $75.3 million a year later.

The clear action here is to keep an eye on how CompoSecure, Inc. deploys this cash. The significant liquidity and net cash position provide excellent balance sheet flexibility for the announced business combination with Husky Technologies, which is expected to close in Q1 2026. This is exactly the kind of financial strength you want to see before a major strategic move. For more on the players behind the scenes, you might want to read Exploring CompoSecure, Inc. (CMPO) Investor Profile: Who's Buying and Why?.

Valuation Analysis

You want to know if CompoSecure, Inc. (CMPO) is overvalued or undervalued right now. The quick answer is that it trades at a significant premium based on current sales, suggesting it's priced for aggressive future growth, but a discounted cash flow (DCF) model suggests the stock is currently undervalued. This is a classic growth stock dilemma: high multiples now, but a clear path to profitability that analysts believe justifies the price.

As of mid-November 2025, the stock price sits around the $19.40 to $20.70 range, which is well below the consensus DCF fair value estimate of $22.32. However, its Price-to-Sales (P/S) ratio is a staggering 16.5x, which is far above the US Tech industry average of 2x. This tells you the market is betting heavily on the company's ability to execute its growth plan and dramatically expand profit margins.

Key Valuation Multiples (2025 Fiscal Year)

To cut through the noise, we need to look at the forward-looking ratios. Trailing metrics are messy for a company transitioning to profitability, which is why you see a negative TTM (Trailing Twelve Months) Price-to-Earnings (P/E) ratio of -12.5. The real story is in the forecast:

• Forward Price-to-Earnings (P/E): The consensus forward P/E for 2025 is estimated at 25.84. This is a reasonable multiple for a high-growth tech-adjacent company that is expected to achieve 168.7% annual earnings growth.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM EV/EBITDA is negative at -17.46 due to negative TTM EBITDA. However, the forward EV/EBITDA is estimated at around 40.44. Here's the quick math: a high forward EV/EBITDA suggests investors are paying a high price for each dollar of expected future core profit, reflecting the anticipated surge in profitability from new programs and operational efficiencies.
• Price-to-Book (P/B): The P/B ratio is less useful here, as the company has had a negative book value in recent years. This is a common characteristic of high-growth companies that have prioritized investment over immediate balance sheet strength.

The high multiples are a premium for potential, not a reflection of current earnings power. You are buying a forecast, not a history.

Stock Trend and Analyst Consensus

The stock has seen a strong run, increasing by 60.94% in 2025. The 52-week trading range shows significant volatility, from a low of $9.24 to a high of $26.78. This volatility is typical for a stock where the valuation narrative is changing rapidly from a turnaround story to a pure growth play.

The Wall Street consensus is overwhelmingly positive. Out of the analysts covering CompoSecure, Inc. (CMPO), the consensus rating is a 'Strong Buy' or 'Moderate Buy,' with 6 Buy ratings and 1 Hold rating. The average 12-month price target is approximately $25.17, which implies an upside of roughly 29.74% from the mid-November 2025 price of $19.40.

The company does not pay a regular cash dividend. The TTM dividend yield is 0.00% and the payout ratio is 0%. This is defintely the right capital allocation strategy for a growth company, as it keeps cash inside the business to fund the 37.6% projected annual revenue surge.

For a deeper dive into who is driving this price action, you should read Exploring CompoSecure, Inc. (CMPO) Investor Profile: Who's Buying and Why?

Risk Factors

You need to look past the headline growth numbers-like the raised full-year 2025 Non-GAAP Net Sales guidance of approximately $463 million-and focus on the structural risks. While CompoSecure, Inc. (CMPO) is executing well on its operational plan, several internal and external factors could defintely derail the investment thesis.

The most immediate concern is the company's financial structure. The balance sheet indicators show stress, with the Current Ratio sitting at a low 0.11. To be fair, the Q3 2025 GAAP Net Loss of ($174.7 million) was primarily a non-cash hit from revaluing warrant and earnout liabilities, but still, the Altman Z-Score of 0.55 places the company in the distress zone, signaling potential bankruptcy risk within two years. This metric is a flashing yellow light you cannot ignore.

Here's a quick breakdown of the core risks you should map to your valuation model:

• Customer Concentration: Heavy reliance on a few large financial and fintech clients.
• Market Disruption: Rapid adoption of digital wallets and biometric authentication could slow demand for premium physical cards.
• Integration Risk: Successful integration of the recently announced Husky Technologies business combination (valued at approximately $7.4 billion) is not guaranteed.
• International Weakness: International sales declined a sharp 35% year-over-year, showing a lack of global diversification.

Strategic and Operational Headwinds

The reliance on a small number of major clients is a critical strategic risk. If a key partner, like one of the major banks or fintechs, decides to pivot or reduces its metal card program, CompoSecure, Inc.'s revenue could quickly suffer. This lack of broad diversification makes their top line vulnerable. Also, the metal cards segment faces increasing pricing pressure due to new market entrants, which could squeeze the impressive Q3 2025 Gross Margin of 59.0% over time.

The Husky Technologies merger, while potentially transformative-it's expected to be accretive to earnings-is a massive undertaking. Integrating a company valued at approximately $7.4 billion introduces significant execution risk, especially for a company still navigating financial complexity. You need to watch the synergy capture closely over the next few quarters.

Mitigation and Offsets

The good news is that management is aware of the operational risks and has been proactive. The implementation of the CompoSecure Operating System is already yielding tangible results, driving efficiency gains that helped boost the Q3 2025 Non-GAAP Adjusted EBITDA by 30% to $47.7 million. This operational focus is key to achieving the full-year 2025 Adjusted EBITDA guidance of $165 million to $170 million.

Furthermore, the company's Non-GAAP net cash position of $75.3 million as of September 30, 2025, provides a buffer against near-term liquidity concerns, despite the low Current Ratio. This cash position is a significant improvement from the prior year's net debt position. For a deeper dive into the long-term vision guiding these strategic moves, you can review the Mission Statement, Vision, & Core Values of CompoSecure, Inc. (CMPO).

Growth Opportunities

You're seeing CompoSecure, Inc. (CMPO) post strong financial results, and you're right to wonder if this momentum is sustainable. The short answer is yes, but the growth story hinges on a massive, transformative acquisition and disciplined operational execution. The company has raised its full-year 2025 guidance, projecting total Non-GAAP Net Sales of approximately $463 million and Non-GAAP Pro Forma Adjusted EBITDA between $165 million and $170 million.

This isn't just a bump; it's a structural shift driven by strategic moves that should solidify their position in the premium payment and security markets. The path forward is clear: integrate the new business, keep expanding the core metal card market, and squeeze more efficiency from operations. It's a compelling mix of organic and inorganic growth.

Key Growth Drivers and Expansion

The biggest near-term driver is the planned business combination with Husky Technologies Limited, a manufacturer of engineered equipment. Valued at approximately $7.4 billion, this deal is expected to close in the first quarter of 2026 and should be accretive to earnings per share in the first full year. This move immediately delivers scale, aiming for mid- to high single-digit organic growth and approximately 70% recurring revenue for the combined entity.

On the core business side, the company continues to win new premium card programs with both major financial institutions and fintechs, including Citi, Chime, Gemini, and Uphold. This strong domestic demand helped drive Q3 2025 Non-GAAP Net Sales up 13% year-over-year to $120.9 million. Honestly, the market is huge; CompoSecure currently captures less than 1% of the total payment card market, so the runway for organic growth remains significant.

• Integrate Husky Technologies for scale and recurring revenue.
• Expand premium metal card programs with new bank and fintech partners.
• Leverage the Arculus platform for digital security and authentication.

Financial Projections and Competitive Edge

Analysts are certainly bullish on the future, forecasting revenue to climb 37.6% annually and projecting a massive 168.7% annual earnings growth, which would push the company into profitability within the next three years. This confidence isn't just based on sales; it's grounded in operational improvements. The implementation of the CompoSecure Operating System (COS) is a huge factor, driving manufacturing efficiencies and expanding the Q3 2025 gross margin to a stellar 59.0%, up from 51.7% in the prior-year quarter.

Here's the quick math: higher sales plus better margins equals significantly higher EBITDA. The Q3 2025 Non-GAAP Pro Forma Adjusted EBITDA jumped 30% to $47.7 million. This operational discipline is a key competitive advantage (along with its proprietary metal card technology). Metal cards, a small cost for issuers, can boost customer spend by about 5% and increase customer acquisition/retention demand by over 10%. That's a value proposition that sells itself to banks.

You can see the long-term vision laid out in their core principles: Mission Statement, Vision, & Core Values of CompoSecure, Inc. (CMPO). Finance: Monitor the Husky Technologies Limited integration progress very defintely, specifically looking for the anticipated 100 basis points of margin expansion per year.