Capital Southwest Corporation (CSWC)
Valuation Overview•Is Capital Southwest Corporation Overvalued or Undervalued?
Commands a premium valuation multiple over its peers, likely pricing in superior execution.
Moderate quality score of 54/100, reflecting stable operating margins and manageable leverage.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street sentiment is generally neutral alongside robust expected earnings growth. This outlook is strongly supported by highly attractive capital returns, anchored by a strong, well-covered dividend yield.
CSWC demonstrates adequate business quality with stable profitability. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company maintains stable top-line performance paired with robust earnings compounding (20.0% EPS 3Y CAGR). This growth is supported by elite operational efficiency, sustaining an impressive 62.0% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $54.0M | +50.1% | — | — | +32.7% | |
| EBITDA | $44.7M | — | +66.0% | — | — | |
| Net Income | $27.5M | +60.2% | +50.6% | — | — | |
| EPS (Diluted) | $0.44 | +29.3% | +20.0% | -6.6% | — | |
| Free Cash Flow | -$59.5M | +11.6% | +5.2% | -0.9% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 77.8% | 77.5% | 76.2% | 74.9% |
| Operating Margin | 62.0% | 60.3% | 54.2% | 43.2% |
| Net Margin | 50.9% | 47.9% | 44.4% | 33.0% |
| FCF Margin | -30.0% | -112.1% | -153.5% | -135.5% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.56 | $0.57 | +1.8% | ||
| Q1'26 | $0.59 | $0.64 | +9.0% | ||
| Q4'25 | $0.58 | $0.57 | -1.7% | ||
| Q3'25 | $0.59 | $0.59 | +0.0% | ||
| Q2'25 | $0.62 | $0.54 | -12.9% | ||
| Q1'25 | $0.62 | $0.63 | +1.6% | ||
| Q4'24 | $0.66 | $0.66 | +0.0% | ||
| Q3'24 | $0.66 | $0.63 | -4.5% |
Total return is +19.7% (1Y), lagging the benchmark by -5.3%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +8.8% | -0.5% | — |
| 1Y | +19.7% | -5.3% | +12.0% |
| 3YCAGR | +16.8% | -2.9% | +39.7% |
| 5YCAGR | +7.6% | -5.7% | +50.7% |
| 10YCAGR | +12.6% | -1.0% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Capital Southwest Corporation (CSWC) valuation, health, and returns.
Capital Southwest Corporation is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Expensive versus peers compared to industry peers. trading near fair value (DCF: $26.28)
Capital Southwest Corporation has multiple valuation anchors: DCF Intrinsic Value: $26.28 | Peer Relative Fair Value: $17.51 | Wall Street Analyst Target: $23.58 (implying +2.6% upside). A convergence of these signals offers higher conviction.
Capital Southwest Corporation displays fair financial health with a composite quality score of 54/100, supported by a Piotroski F-Score of 4/9, Return on Invested Capital (ROIC) of 7.1%.
Capital Southwest Corporation pays a 9.7% dividend yield, covered by a 130% payout ratio with 0 years of growth, supplemented by a 0.0% buyback yield.
Capital Southwest Corporation's current growth trajectory is Accelerating. The company achieved +50.1% 1Y revenue growth and +29.3% 1Y EPS growth, compared to its 3Y revenue CAGR of N/A.
Wall Street consensus is Buy based on 10 analysts, beating EPS expectations in 50% of recent quarters with a 2-quarter streak. The consensus price target represents a +2.6% change from current levels.
Investment risks for Capital Southwest Corporation include: -16.5% 1-year max drawdown, stretched payout ratio. Volatility risk is characterized by a beta of 0.69x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.