Core & Main (CNM) AI Stock Analysis

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Core & Main

(NYSE:CNM)

75Outperform

Core & Main's overall stock score reflects strong financial performance and positive earnings call insights, indicating a well-managed company with growth potential. However, the stock's high valuation and some technical indicators suggest caution. The company is poised for continued success, particularly in the Industrial - Distribution sector, but investors should monitor market conditions closely.

Positive Factors

Market Outlook

The early outlook for 2025 appears constructive, with share gains and stable pricing expected.

Shareholder Returns

The company has demonstrated commitment to shareholder returns with a $100 million share repurchase in Q3.

Negative Factors

Financial Guidance

The FY25 guidance for both revenue and EBITDA margins came in below the initial framework provided in 3Q.

Price Pressure

Pricing for plastic, iron, and steel pipes declined, which could put further downward pressure on CNM's gross margin.

Core & Main (CNM) vs. S&P 500 (SPY)

Market Cap

$9.76B

Dividend YieldN/A

Average Volume (3M)2.60M

Price to Earnings (P/E)23.3

Beta (1Y)1.42

Revenue Growth11.03%

EPS Growth-0.85%

CountryUS

Employees5,700

SectorIndustrials

Sector Strength66

IndustryIndustrial - Distribution

Share Statistics

EPS (TTM)0.33

Shares Outstanding190,058,500

10 Day Avg. Volume2,659,148

30 Day Avg. Volume2,604,575

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.34

Price to Cash Flow (P/CF)N/A

P/FCF Ratio93.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$58.55

Price Target Upside18.04% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering12

Core & Main Business Overview & Revenue Model

Company DescriptionCore & Main, Inc. distributes water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies, and professional contractors in the municipal, non-residential, and residential end markets in the United States. Its products include pipes, valves, hydrants, fittings, and other products and services; storm drainage products, such as corrugated piping systems, retention basins, inline drains, manholes, grates, geosynthetics, and other related products; fire protection products, including fire protection pipes, sprinkler heads and other devices, fire suppression systems, and related accessories, as well as fabrication services; and meter products, such as smart meter products, installation, software and other services. The company's specialty products and services are used in the maintenance, repair, replacement, and construction of water and fire protection infrastructure. Core & Main, Inc. was founded in 1874 and is headquartered in St. Louis, Missouri.

How the Company Makes MoneyCore & Main generates revenue primarily through the sale and distribution of water, wastewater, storm drainage, and fire protection products. The company's key revenue streams include direct sales to municipal water utilities, private water companies, and professional contractors engaged in construction and maintenance of water and wastewater infrastructure. Core & Main benefits from its extensive network of distribution centers and a diverse supplier base, enabling it to offer a broad product portfolio and maintain strong relationships with manufacturers. Additionally, the company leverages its technical expertise and service capabilities to provide value-added solutions, such as product training and design support, further enhancing its revenue potential. Significant partnerships with manufacturers and its strategic presence in key geographic markets also contribute to Core & Main's financial performance.

Core & Main Financial Statement Overview

Summary

Core & Main displays strong financial performance with consistent revenue growth and solid profitability metrics. Although the company's net profit margin is moderate, it maintains a robust balance sheet with manageable leverage and effective cash flow generation. The potential for further profitability improvements is present.

Income Statement

Very Positive

Core & Main has demonstrated consistent revenue growth, highlighted by a 10.99% increase in the latest annual period. The gross profit margin remains strong at 26.6%, supported by steady EBIT and EBITDA margins of 9.66% and 11.81%, respectively. However, the net profit margin is moderate at 5.52%, indicating room for improvement in net profitability.

Balance Sheet

Positive

The company maintains a solid equity base with a debt-to-equity ratio of 1.48, suggesting a balanced leverage approach. The equity ratio stands at 28.92%, reflecting a good proportion of equity financing in its asset structure. Return on equity is robust at 24.21%, underscoring effective use of shareholders' capital, though the total debt level requires monitoring.

Cash Flow

Very Positive

Core & Main's cash flow generation is strong, with a substantial free cash flow that aligns closely with net income, yielding a free cash flow to net income ratio of 1.43. The operating cash flow to net income ratio is also healthy at 1.51, indicating efficient cash generation relative to earnings. The company has shown a focus on maintaining positive cash flow, although the recent year-over-year decline in operating cash flow warrants attention.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
7.44B	6.70B	6.65B	5.00B	3.64B
	Gross Profit
1.98B	1.82B	1.79B	1.28B	878.40M
	EBIT
719.00M	740.00M	775.00M	425.00M	185.50M
	EBITDA
913.00M	894.00M	924.00M	511.00M	319.00M
	Net Income Common Stockholders
411.00M	371.00M	581.00M	225.00M	37.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
8.00M	1.00M	177.00M	1.00M	380.90M
	Total Assets
5.87B	5.07B	4.91B	4.43B	3.59B
	Total Debt
2.51B	2.07B	1.63B	1.62B	2.39B
	Net Debt
2.50B	2.07B	1.46B	1.62B	2.01B
	Total Liabilities
4.10B	3.54B	2.50B	2.60B	2.92B
	Stockholders Equity
1.70B	1.45B	1.75B	1.32B	673.90M
Cash Flow		Free Cash Flow
586.00M	1.03B	376.00M	-51.00M	207.90M
	Operating Cash Flow
621.00M	1.07B	401.00M	-31.00M	219.80M
	Investing Cash Flow
-788.00M	-270.00M	-152.00M	-203.00M	-228.90M
	Financing Cash Flow
174.00M	-975.00M	-73.00M	-146.00M	209.10M

Core & Main Technical Analysis

Technical Analysis Sentiment

Negative

Last Price49.60

Price Trends

50DMA

49.53

Negative

100DMA

51.15

Negative

200DMA

48.84

Negative

Market Momentum

MACD

-0.15

Negative

RSI

48.00

Neutral

STOCH

80.36

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNM, the sentiment is Negative. The current price of 49.6 is above the 20-day moving average (MA) of 48.51, above the 50-day MA of 49.53, and above the 200-day MA of 48.84, indicating a bearish trend. The MACD of -0.15 indicates Negative momentum. The RSI at 48.00 is Neutral, neither overbought nor oversold. The STOCH value of 80.36 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CNM.

Core & Main Risk Analysis

Core & Main disclosed 50 risk factors in its most recent earnings report. Core & Main reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Core & Main Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DXPE	80 Outperform	$1.24B	18.71	17.54%	―	7.35%	9.35%
WCC	76 Outperform	$7.38B	11.58	14.34%	1.12%	-2.53%	-4.03%
CNM	75 Outperform	$9.76B	23.26	26.10%	―	11.03%	-0.85%
MSM	70 Outperform	$4.31B	20.35	15.53%	4.35%	-5.71%	-31.93%
AIT	67 Neutral	$8.51B	22.45	22.70%	0.71%	0.37%	3.52%
GIC	64 Neutral	$822.16M	13.60	22.49%	4.71%	3.26%	-14.20%
Sector *	62 Neutral	$4.17B	11.26	5.46%	215.76%	4.12%	-8.54%

* Industrials Sector Average

Performance Comparison

CNM

Core & Main

48.15

-6.46

-11.83%

AIT

Applied Industrial Technologies

214.21

31.87

17.48%

DXPE

DXP Enterprises

77.00

26.95

53.85%

MSM

MSC Industrial

75.93

-12.73

-14.36%

GIC

Global Industrial Company

21.26

-17.75

-45.50%

WCC

Wesco International

145.95

-8.48

-5.49%

Core & Main Earnings Call Summary

Earnings Call Date: Mar 25, 2025 | % Change Since: -0.08% | Next Earnings Date: Jun 10, 2025

Earnings Call Sentiment Positive

Core & Main experienced a strong fiscal 2024 with record sales and successful strategic initiatives, such as M&A activities and market share gains, despite some challenges in gross margin and interest expenses. The planned executive transition is positive for continuity, and the municipal market remains a solid foundation for growth.

Highlights

Record Net Sales and Growth

Core & Main achieved record net sales of over $7.4 billion in fiscal 2024, marking the 15th consecutive year of positive sales growth with an 18% increase in Q4 sales.

Strong Cash Flow and Share Repurchase

The company generated over $620 million in operating cash flow and repurchased 4 million shares, returning $176 million to shareholders.

Successful M&A Strategy

Core & Main completed over 40 acquisitions since 2017, adding over $600 million in annual sales in 2024 alone, with a healthy pipeline of potential deals for 2025.

Municipal Market Strength

Municipal spending on water infrastructure remains resilient, driven by necessary investments, with projected low single-digit growth for 2025.

Executive Transition and Leadership Continuity

CEO Steve LeClair announced a planned transition, with Mark Witkowski becoming CEO and Robyn Bradbury as CFO, ensuring leadership continuity.

Lowlights

Slight Decline in Gross Margin

Gross margin for fiscal 2024 decreased by 50 basis points to 26.6% due to a higher average cost of inventory compared to the previous year.

Interest Expense Increase

Interest expense for fiscal 2024 rose to $142 million from $81 million the prior year due to higher average borrowings.

Uncertainty in Pricing and Tariffs

Tariffs create uncertainty that could limit end market growth, although they are expected to be neutral to slightly positive for pricing and gross margins.

Company Guidance

During the Core & Main Q4 2024 earnings call, the company provided several key metrics and guidance for fiscal 2025. The company reported an 18% increase in net sales for the fourth quarter, reaching nearly $1.7 billion, and a record $7.4 billion in net sales for fiscal 2024, marking their 15th consecutive year of sales growth. Adjusted EBITDA for the fourth quarter was $179 million, with a margin of 10.5%, while full-year adjusted EBITDA was $930 million with a margin of 12.5%. For fiscal 2025, Core & Main expects net sales to range from $7.6 billion to $7.8 billion, reflecting growth of 2% to 5%, or 4% to 7% on an average daily sales basis. They anticipate adjusted EBITDA of $950 million to $1 billion, implying a growth of 2% to 8%, or 4% to 10% on an average daily sales basis, with margins ranging from 12.5% to 12.8%. The company also highlighted its plan to drive gross margin expansion through private label, sourcing optimization, and pricing initiatives, maintaining a balanced exposure across various markets, and continuing its acquisition strategy, having completed over 40 acquisitions since 2017.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.