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Core & Main (CNM)
NYSE:CNM
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Core & Main (CNM) AI Stock Analysis

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CNM

Core & Main

(NYSE:CNM)

Rating:75Outperform
Price Target:
$70.00
▲(7.41%Upside)
Core & Main's robust financial performance and positive earnings call outlook are significant strengths, supporting a high score. Technical analysis indicates bullish momentum but potential overbought conditions. The valuation score is impacted by a high P/E ratio and the absence of a dividend yield.
Positive Factors
Gross Margin Improvement
Gross margin improvement was attributed to private label strategies, price discipline, and sourcing efforts.
Growth Opportunities
Management noted that funding from the Infrastructure Investment and Jobs Act (IIJA) continues to generate new opportunities for growth.
Sales Growth
CNM reported a net sales growth of 9.8%, exceeding both Wells Fargo's and the Street's estimates.
Negative Factors
Commodity Pricing
Should commodity-linked pricing continue to decline sequentially, this would put further downward pressure on CNM’s gross margin.
EBITDA Margin
CNM's EBITDA margin of 11.7% was below expectations, which might lead to adjustments in estimates.
Underperform Rating
The analyst reiterates an Underperform rating for the stock.

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

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 a wide array of products essential for waterworks and fire protection projects. The company's key revenue streams include sales to municipalities, utility companies, and contractors, who rely on Core & Main for the supply of critical infrastructure components such as pipes, valves, and hydrants. Additionally, the company offers value-added services, including product training, design assistance, and inventory management, which enhance customer relationships and drive repeat business. Strategic partnerships with leading manufacturers enable Core & Main to maintain a robust product offering and competitive pricing, further contributing to its revenue growth.

Core & Main Earnings Call Summary

Earnings Call Date:May 04, 2025
(Q1-2025)
|
% Change Since: 31.29%|
Next Earnings Date:Sep 09, 2025
Earnings Call Sentiment Positive
The call highlighted record-breaking sales and EBITDA, strong market share gains, and effective pricing strategies. However, challenges such as residential market softening and tariff uncertainty were acknowledged. Despite these challenges, the overall outlook remains positive with continued growth strategies and strong liquidity.
Q1-2025 Updates
Positive Updates
Record-Breaking First Quarter Sales and EBITDA
Core & Main achieved first-quarter net sales of $1.9 billion and adjusted EBITDA of $224 million, both all-time highs for the first quarter.
Organic Sales Growth and Market Share Gains
The company delivered mid-single-digit organic sales growth, driven by product, customer, and geographic expansion initiatives, along with 10% growth in meters and double-digit growth in treatment plant and fusible high-density polyethylene offerings.
Strong Municipal Construction Activity
The company observed steady growth in municipal construction activity, supported by the Infrastructure Investment and Jobs Act, with expanding pipelines for water and wastewater treatment plants and storm water management.
Positive Nonresidential Market Trends
Core & Main experienced strong sales volumes in data center construction and positive trends in institutional buildings, multifamily housing, and road and bridge projects.
Effective Pricing and Margin Management
Sequential improvement in gross margins was achieved through disciplined pricing and strong execution in private label and sourcing efforts.
Robust Acquisition and Greenfield Expansion Strategy
The company completed over 40 acquisitions since 2017, adding significant annual net sales, and plans to open 5-10 new greenfields in 2025.
Strong Liquidity and Shareholder Returns
Core & Main ended the quarter with $1.1 billion in liquidity and repurchased 837,000 shares, deploying $39 million in share repurchases.
Negative Updates
Residential Market Softening
Signs of softening in residential lot development were noted, with developers reducing footprints due to economic conditions and affordability pressures.
Tariff and Inflation Uncertainty
Uncertainty associated with tariffs, inflation, and interest rates could impact customer sentiment and demand in the second half of the year.
Higher SG&A Expenses
Selling, general, and administrative expenses increased 14% in the first quarter, largely due to acquisitions and inflation, impacting productivity gains.
Company Guidance
During the Core & Main Q1 2025 earnings call, the company reported record-high net sales of $1.9 billion and an adjusted EBITDA of $224 million, attributing these achievements to strong municipal construction activity and funding from the Infrastructure Investment and Jobs Act. The company highlighted mid-single-digit organic sales growth, driven by a 10% increase in meters and significant growth in treatment plant and fusible high-density polyethylene offerings. Core & Main also discussed a $58 million capital deployment in Q1, including share repurchases and debt service, and reaffirmed its full-year guidance of $7.6 to $7.8 billion in net sales and an adjusted EBITDA of $950 million to $1 billion. The company noted an effective tax rate of 25.5%, driven by increased allocation of net income to Core & Main, Inc., and ended the quarter with $2.3 billion in net debt and a net leverage of 2.4x. Looking forward, Core & Main plans to continue its growth strategy through greenfields and acquisitions, aiming for long-term market share gains amidst a dynamic macroeconomic environment.

Core & Main Financial Statement Overview

Summary
Core & Main exhibits strong financial performance with consistent revenue and profit growth, efficient operations, and solid cash flow generation. The company's leverage is moderate, and it maintains healthy profitability ratios. The income statement, balance sheet, and cash flow metrics are robust, but there is room for improving equity levels.
Income Statement
90
Very Positive
Core & Main has demonstrated robust growth in its revenue and profitability. The Gross Profit Margin for TTM (Trailing-Twelve-Months) is 26.57%, and the Net Profit Margin is 5.47%. The Revenue Growth Rate from the previous annual report to the current TTM is 2.28%, indicating consistent growth. The EBIT Margin is at 9.49%, and the EBITDA Margin is 12.06%, showing strong operational efficiency.
Balance Sheet
75
Positive
The company maintains a moderate Debt-to-Equity Ratio at 1.45, indicating a balanced approach to leverage. The Return on Equity (ROE) is 23.85%, which is quite robust, reflecting good profitability relative to shareholder equity. The Equity Ratio stands at 27.78%, which suggests a healthy proportion of equity financing, though there's room for improvement in enhancing equity levels.
Cash Flow
85
Very Positive
Core & Main has shown strong cash flow generation, with a Free Cash Flow to Net Income Ratio of 1.39 and an Operating Cash Flow to Net Income Ratio of 1.49, indicating significant cash flow relative to net income. The Free Cash Flow Growth Rate is -1.19%, reflecting a slight decline, but the overall cash flow generation remains strong.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue7.44B6.70B6.65B5.00B3.64B
Gross Profit1.98B1.82B1.79B1.28B878.00M
EBITDA913.00M894.00M924.00M524.00M338.00M
Net Income411.00M371.00M366.00M166.00M37.00M
Balance Sheet
Total Assets5.87B5.07B4.91B4.43B3.59B
Cash, Cash Equivalents and Short-Term Investments8.00M1.00M177.00M1.00M380.90M
Total Debt2.51B2.07B1.63B1.62B2.39B
Total Liabilities4.10B3.54B2.50B2.60B2.92B
Stockholders Equity1.70B1.45B1.75B1.32B801.00M
Cash Flow
Free Cash Flow586.00M1.03B376.00M-51.00M207.90M
Operating Cash Flow621.00M1.07B401.00M-31.00M219.80M
Investing Cash Flow-788.00M-270.00M-152.00M-203.00M-228.90M
Financing Cash Flow174.00M-975.00M-73.00M-146.00M215.00M

Core & Main Technical Analysis

Technical Analysis Sentiment
Positive
Last Price65.17
Price Trends
50DMA
58.37
Positive
100DMA
53.87
Positive
200DMA
51.85
Positive
Market Momentum
MACD
1.70
Negative
RSI
73.64
Negative
STOCH
92.02
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNM, the sentiment is Positive. The current price of 65.17 is above the 20-day moving average (MA) of 61.98, above the 50-day MA of 58.37, and above the 200-day MA of 51.85, indicating a bullish trend. The MACD of 1.70 indicates Negative momentum. The RSI at 73.64 is Negative, neither overbought nor oversold. The STOCH value of 92.02 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CNM.

Core & Main Risk Analysis

Core & Main disclosed 47 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 (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$1.66B22.0019.45%11.94%34.08%
75
Outperform
$12.85B30.2125.11%10.80%0.98%
75
Outperform
$1.07B17.5122.15%3.67%-0.79%-13.64%
74
Outperform
$4.85B24.7114.34%3.91%-4.11%-31.26%
73
Outperform
$10.33B16.0814.38%0.82%-1.80%9.55%
73
Outperform
$10.21B26.7822.23%0.62%0.50%4.48%
67
Neutral
£2.85B10.424.69%215.06%2.73%-20.56%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CNM
Core & Main
65.17
11.64
21.74%
AIT
Applied Industrial Technologies
268.07
54.56
25.55%
DXPE
DXP Enterprises
105.75
52.53
98.70%
MSM
MSC Industrial
87.06
3.00
3.57%
GIC
Global Industrial Company
27.35
-7.20
-20.84%
WCC
Wesco International
211.75
42.99
25.47%

Core & Main Corporate Events

Executive/Board ChangesShareholder Meetings
Core & Main Holds Annual Shareholder Meeting
Neutral
Jun 24, 2025

Core & Main, Inc. held its annual meeting of shareholders on June 24, 2025, where key proposals were voted on. Three individuals were elected as Class I directors to serve until the 2028 annual meeting, and the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm was ratified. Additionally, shareholders approved the compensation for the company’s named executive officers for the fiscal year ended February 2, 2025.

The most recent analyst rating on (CNM) stock is a Hold with a $56.00 price target. To see the full list of analyst forecasts on Core & Main stock, see the CNM Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 03, 2025