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Core & Main (CNM)
NYSE:CNM
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Core & Main
(NYSE:CNM)
Rating:80Outperform
Price Target:
$66.00
▲(14.92%Upside)
Positive Factors
Growth Opportunities
Funding from the Infrastructure Investment and Jobs Act (IIJA) continues to generate new opportunities for growth.
Sales Growth
Organic sales growth was driven by volume, indicating an acceleration in growth on a two-year basis.
Sales Performance
Net sales growth of 17.9% surpassed the expectations of both Wells Fargo and the Street.
Negative Factors
Earnings Expectations
The FY25 guidance for both revenue and EBITDA margins came in below the initial framework provided in 3Q.
Gross Margin Pressure
Should commodity-linked pricing continue to decline sequentially, this would put further downward pressure on CNM's gross margin.
Operating Margins
Operating margin at 7.3% came in below both Wells Fargo and Street estimates.
Core & Main (CNM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.45B
Dividend YieldN/A
Average Volume (3M)2.09M
Price to Earnings (P/E)26.6
Beta (1Y)1.38
Revenue Growth10.80%
EPS Growth0.98%
CountryUS
Employees5,700
SectorIndustrials
Sector Strength90
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)0.52
Shares Outstanding189,654,480
10 Day Avg. Volume3,273,571
30 Day Avg. Volume2,087,678
Financial Highlights & Ratios
PEG Ratio0.04
Price to Book (P/B)2.08
Price to Sales (P/S)0.00
P/FCF Ratio9.66
Enterprise Value/Market Cap0.44
Enterprise Value/Revenue0.18
Enterprise Value/Gross Profit2.63
Enterprise Value/Ebitda1.44
Forecast
1Y Price Target
$61.00Price Target Upside6.22% 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 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: 15.69%|
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 demonstrates strong financial performance with consistent revenue growth and robust profitability metrics. The financial leverage is manageable, supported by a healthy equity base, though cash flow trends need monitoring due to recent declines.Income Statement
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.85
Very Positive
Balance Sheet
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.78
Positive
Cash Flow
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.82
Very Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| 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
Positive
57.43
Price Trends
52.58
Positive
52.11
Positive
49.48
Positive
Market Momentum
1.63
Negative
55.67
Neutral
59.57
Neutral
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 57.43 is above the 20-day moving average (MA) of 55.70, above the 50-day MA of 52.58, and above the 200-day MA of 49.48, indicating a bullish trend. The MACD of 1.63 indicates Negative momentum. The RSI at 55.67 is Neutral, neither overbought nor oversold. The STOCH value of 59.57 is Neutral, 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 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 (66)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $11.45B | 26.62 | 25.11% | ― | 10.80% | 0.98% | |
77 Outperform | $1.26B | 16.69 | 19.45% | ― | 11.94% | 34.08% | |
74 Outperform | $8.77B | 23.09 | 22.23% | 0.80% | 0.50% | 4.48% | |
74 Outperform | $1.04B | 17.03 | 22.15% | 3.84% | -0.79% | -13.64% | |
73 Outperform | $8.75B | 13.57 | 14.38% | 1.02% | -1.80% | 9.55% | |
69 Neutral | $4.62B | 21.82 | 15.53% | 4.14% | -5.71% | -31.93% | |
66 Neutral | $4.52B | 12.34 | 5.41% | 3.62% | 4.15% | -12.18% |
* Industrials Sector Average
Performance Comparison
CNM
Core & Main
56.72
5.67
11.11%
AIT
Applied Industrial Technologies
230.24
41.09
21.72%
DXPE
DXP Enterprises
78.83
31.13
65.26%
MSM
MSC Industrial
81.98
0.88
1.09%
GIC
Global Industrial Company
26.89
-5.16
-16.10%
WCC
Wesco International
176.77
3.88
2.24%
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.