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CSW Industrials (CSW)
NYSE:CSW
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CSW Industrials
(NYSE:CSW)
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Rating:66Neutral
Price Target:
$296.00
▲(9.64% Upside)
The score is driven primarily by strong underlying financial performance (high margins and solid free cash flow), supported by a generally positive earnings-call outlook on acquisition synergies and disciplined leverage. These positives are tempered by weak near-term technicals (oversold/downtrend versus key moving averages) and a demanding valuation (high P/E with low yield).
Positive Factors
Free Cash Flow Strength
Consistent, sizable free cash flow provides durable funding for organic investment, M&A integration, debt repayment, and share repurchases. Strong cash conversion (FCF close to reported earnings) supports capital allocation flexibility and reduces refinancing risk across economic cycles.
Strategic M&A Expands Market Reach
The Mars Parts acquisition materially broadens HVAC/R and plumbing offerings, increasing addressable market and cross-sell potential via CSW’s distribution network. Strategic, accretive deals diversify end markets and product mix, strengthening durable revenue sources beyond organic cycles.
Disciplined Leverage and Capital Allocation
Management’s adherence to a 1–3x leverage target while funding acquisitions and buybacks indicates disciplined financial policy. Maintaining leverage in target range, plus partial interest-rate hedging, preserves liquidity and strategic optionality for further accretive investments over the medium term.
Negative Factors
Rising Absolute Debt Levels
A meaningful one‑time jump in TTM debt (to fund large acquisitions) raises interest and refinancing exposure. If cyclical weakness persists, elevated debt can constrain capital allocation, increase funding costs, and limit the company’s ability to invest without further leverage reduction.
Margin Compression and Amortization Headwinds
Acquisition dilution, higher input/tariff costs and substantial acquisition-related amortization are compressing reported margins and GAAP EPS. Until synergies and pricing fully offset these effects, margin recovery may lag and limit sustainable operating leverage despite long-term integration plans.
Organic Demand Weakness in Core Segment
Contractor Solutions is ~71% of revenue; persistent destocking and housing softness materially reduce organic growth potential. Prolonged weakness would increase reliance on acquisitions to sustain top-line growth and pressure margins if scale benefits take longer to realize.
CSW Industrials (CSW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.45B
Dividend Yield0.26%
Average Volume (3M)141.20K
Price to Earnings (P/E)36.4
Beta (1Y)1.62
Revenue Growth14.87%
EPS Growth15.63%
CountryUS
Employees2,600
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)1.42
Shares Outstanding16,686,708
10 Day Avg. Volume159,157
30 Day Avg. Volume141,200
Financial Highlights & Ratios
PEG Ratio1.21
Price to Book (P/B)4.42
Price to Sales (P/S)5.39
P/FCF Ratio31.13
Enterprise Value/Market Cap1.18
Enterprise Value/Revenue5.24
Enterprise Value/Gross Profit12.27
Enterprise Value/Ebitda22.81
Forecast
1Y Price Target
$322.50Price Target Upside19.45% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
CSW Industrials Business Overview & Revenue Model
Company DescriptionCSW Industrials, Inc. provides various industrial products in the United States and internationally. It operates through three segments: Contractor Solutions, Engineered Building Solutions, and Specialized Reliability Solutions. The Contractor Solutions segment offers condensate pads, pans, and pumps; condensate switches and traps; drain management system; drain waste and vent mechanical products; ductless mini-split systems installation support tools and accessories; HVAC electrical protection, installation supplies, and maintenance chemicals; evaporator coils and air handlers; grilles, registers, diffusers and vents; line set covers; load management systems; refrigerant caps; solvents, cements, traps, and thread sealants; surge protection products; and wire pulling head tools. This segment sells its products under the AquaGuard, Aspen, Clean Check, Cover Guard, Desolv, Dust Free, EZ Trap, Falcon Stainless, Fortress, Goliath, G-O-N, Guardian Drain Lock, Hubsett, Kickstart, Leak Freeze, No. 5, Novent, PF WaterWorks, PRO-Fit, PSP Products, RectorSeal, Safe-T-Switch, Shoemaker Manufacturing, Slimduct, SureSeal, TRU-BLU, and TRUaire brands. The Engineered Building Solutions segment offers architectural railings and metals; fire and smoke protection, and fire stopping solutions; and pre-engineered and custom architectural building components under the Balco, BlazeSeal, Greco, IllumiTread, Metacaulk, MetaflexPro, and Smoke Guard brands. The Specialized Reliability Solutions segment provides compounds, lubricants, and sealants; industrial maintenance and repair, anti-seize, contamination control, and desiccant breather filtration products; lubricant management systems; operation solutions; and rail friction modifiers under the AccuTrack, Air Sentry, BioRail, Deacon, Envirolube, Extreme, Gearmate, Jet-Lube, Kopr-Kote, Matrix, NCS-30 ECF, OilSafe, RailArmor, Run-N-Seal ECF, TOR Armor, and Whitmore brands. The company was incorporated in 2014 and is based in Dallas, Texas.
How the Company Makes MoneyCSW Industrials generates revenue through multiple key streams, primarily by selling its diverse range of industrial and specialty chemical products to a variety of end markets. The company benefits from a strong distribution network and has established partnerships with major distributors and retailers, which facilitates broad market access and enhances sales. Additionally, CSW engages in direct sales to industrial clients, which contributes significantly to its revenue. The company also focuses on innovation and product development, allowing it to expand its product offerings and capture new market opportunities, thereby driving growth and profitability.
CSW Industrials Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 21, 2026
Earnings Call Sentiment Positive
The call presents a generally positive operational and strategic picture: record revenue and adjusted EBITDA, strong free cash flow, substantial accretive acquisitions with early synergy progress, and disciplined capital actions (including meaningful buybacks). Offsetting these positives are shorter-term financial headwinds driven by acquisition-related amortization and higher interest expense, margin compression due to acquisition dilution and tariff-driven input cost pressure, and near-term organic weakness in the Contractor Solutions end market from customer destocking and housing softness. Management expresses confidence in integration, synergy realization, and eventual margin recovery while maintaining leverage within target levels.Q3-2026 Updates
Positive Updates
Record Revenue and Adjusted EBITDA
Consolidated fiscal Q3 revenue of $233.0M, up 20% year-over-year, and record adjusted consolidated EBITDA of $45.0M, up 7% versus the prior year. Management emphasized adjusted EBITDA as the best multi-period comparison metric given recent acquisitions.
Strong Free Cash Flow and Operating Cash
Operating cash flow of $28.9M (up 165% YoY) and free cash flow of $22.7M (up 193% YoY). Free cash flow per share was $1.37 in the quarter (compared to $0.46 prior year), noting the prior-year tax payment deferral materially impacted comparisons.
Large, Strategic Acquisitions Executed
Approximately $1.0B of acquisitions closed over the last twelve months, including Mars Parts for $650M (Contractor Solutions) and Hydrotech & ProAction for ~$26.5M (SRS), plus the earlier Aspen acquisition. Management stated the transactions are revenue, EBITDA and cash flow accretive and integration is progressing well.
Synergies and Integration Progress — Mars Parts
Management expects to exceed the initially announced $10M run-rate synergies for Mars Parts and to reach (and potentially exceed) a 30% EBITDA margin for that business within 12 months. ERP conversion for Mars Parts completed and commercial harmonization underway.
Disciplined Capital Allocation — Share Repurchase
Executed opportunistic buybacks of ~$70M (283,000 shares at an average $246 per share) during the quarter while maintaining liquidity and target leverage levels.
Balance Sheet and Leverage Within Target
Net debt for covenant calculation purposes of $764M and net debt-to-EBITDA leverage of 2.3x, inside the stated target range of 1–3x. Management noted use of cash and low-cost debt to fund acquisitions and an interest rate hedge (SOFR swap at 3.416%) on part of term loan A.
Operational and Cultural Strength
Safety and employee metrics improved: TRIR improved to 1.1 (from 1.2) and Korn Ferry engagement survey participation was 90% (vs. 85% two years ago), reflecting strong culture and integration focus.
Negative Updates
Adjusted EPS and Interest Expense Pressure
Adjusted EPS was $1.42, down 21% year-over-year. The reduction was primarily driven by approximately $10M of higher interest expense as the company moved from a net cash to a net debt position (quarterly interest expense ~$8M vs. prior-year interest income of $2M).
Margin Compression — Consolidated Gross and EBITDA Margins
Consolidated gross margin declined 170 basis points to 39.7% (from 41.4%), and consolidated adjusted EBITDA margin declined 250 basis points to 19.2% (from 21.7%). Management attributed margin compression to acquisition-related dilution prior to synergies and higher input costs including tariff impacts.
Organic Revenue Weakness in Contractor Solutions
Consolidated organic revenue declined 2.9%. Contractor Solutions reported $168M revenue (71% of total) up 27% overall but included a $6.8M (5.1%) organic decline driven by destocking in the residential HVACR end market and weaker housing activity.
Acquisition Accounting and Amortization Headwinds
Quarter included $11.3M of amortization of acquired intangible assets (68¢ per share) and $6.6M ($0.40 per share) of acquisition-related transaction and integration costs. Management now expects annualized amortization of intangible assets to be approximately $63M going forward, pressuring GAAP EPS comparisons.
Segment Margin Pressures and Restructuring in SRS
Specialized Reliability Solutions (SRS) revenue grew 10.8% to $38M but adjusted EBITDA fell 1.6% to $6.5M and margin contracted 210 bps to 16.9%. Management announced restructuring actions in SRS (one-time charges to be reported in Q4) to target a sustained 20% EBITDA margin.
Engineered Building Solutions (EBS) Softness and Tariff Exposure
EBS revenue declined 1% to $28.5M and segment EBITDA decreased 5% to $3.9M (margin 13.7%), with higher material costs indirectly linked to tariffs and flat backlog (book-to-bill 0.9). Management is taking project-by-project pricing actions.
Seasonality and Increased Volatility from New Acquisitions
Management noted the addition of Aspen and Mars magnifies seasonality and complicates year-over-year comparisons (e.g., Aspen down 23.7% in the quarter but +14% since May 1), and stated third-quarter organic comparisons are less relevant during integration.
Company Guidance
Guidance highlights: management reiterated a target net-debt-to-EBITDA range of 1.0–3.0x (quarter-end net debt for covenant purposes $764M, leverage 2.3x) and said they’ll provide a clearer fiscal‑2027 outlook on the fiscal Q4 call in May; they funded the $650M Mars Parts deal with a $600M five‑year term loan A (SOFR+200bps, hedged in part with a SOFR swap at 3.416% for three years) and had $200M revolver outstanding at quarter end, and opportunistically repurchased $70M of stock (283,000 shares at $246 avg); on Mars Parts they reiterated a $10M run‑rate synergy target and 30% EBITDA margin within 12 months and said they now expect to exceed that goal; annualized amortization from recent acquisitions is expected to be about $63M; Contractor Solutions remains a mid‑to‑high single‑digit organic growth target through the cycle (noting Q3 inorganic‑driven consolidated revenue of $233M, +20% YoY, with a 2.9% consolidated organic decline and Contractor Solutions revenue $168M, +27% overall but -5.1% organic), and they expect China to be ~10% of Contractor Solutions COGS by end‑FY26, Vietnam the low‑30s%, other Asia ~15%; SRS is targeting a sustained 20% EBITDA margin with restructuring benefits effective April 1; and tax guidance for FY2026 was ~23% GAAP (~26% adjusted), all while continuing to prioritize disciplined capital allocation.CSW Industrials Financial Statement Overview
Summary
Strong profitability and cash generation (high margins and healthy free cash flow with solid earnings conversion). Offsetting factors are moderating growth and a notable increase in debt in the TTM period, which raises monitoring needs despite improved leverage vs. earlier years.Income Statement
CSW shows a strong profitability profile with healthy TTM (Trailing-Twelve-Months) gross margin (~43%) and net margin (~15%), supporting solid operating leverage. Revenue has trended up over the multi-year period (from ~$626M in 2021 to ~$1.00B in TTM), though the growth rate has decelerated meaningfully from the outsized 2022 step-up to low-single digits in TTM. Margins are still strong, but TTM operating profit margin is modestly below the 2025 annual level, suggesting some recent normalization.84
Very Positive
Balance Sheet
The balance sheet is generally sound with equity of ~$1.07B in TTM (Trailing-Twelve-Months) and returns on equity in the low-to-mid teens. Leverage looks improved versus earlier years (debt relative to equity materially lower than 2021–2023), which reduces financial risk. A key watch item is the sharp increase in total debt in TTM versus the most recent annual period provided, which could indicate a financing event or reclassification; even so, the company’s capitalization and profitability provide a cushion.73
Positive
Cash Flow
Cash generation is strong: TTM (Trailing-Twelve-Months) operating cash flow (~$179M) and free cash flow (~$162M) are healthy and free cash flow is growing. Free cash flow is consistently close to reported earnings (roughly 0.77–0.92x across periods), supporting earnings quality. The main softness is that TTM operating cash flow is roughly in line with net income (about 1.0x) versus stronger coverage in several prior annual periods, implying less working-capital benefit recently.81
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 878.30M | 792.84M | 757.90M | 626.43M | 626.43M |
| Gross Profit | 393.31M | 350.75M | 318.21M | 252.69M | 255.96M |
| EBITDA | 223.39M | 198.90M | 174.52M | 133.06M | 133.80M |
| Net Income | 136.65M | 101.65M | 96.44M | 66.39M | 66.39M |
Balance Sheet | |||||
| Total Assets | 1.38B | 1.04B | 1.04B | 995.36M | 995.36M |
| Cash, Cash Equivalents and Short-Term Investments | 225.84M | 22.16M | 18.45M | 16.62M | 16.62M |
| Total Debt | 69.36M | 233.56M | 318.37M | 325.32M | 325.32M |
| Total Liabilities | 286.63M | 408.25M | 499.31M | 510.95M | 510.95M |
| Stockholders Equity | 1.07B | 615.72M | 525.67M | 469.09M | 469.09M |
Cash Flow | |||||
| Free Cash Flow | 152.10M | 147.76M | 107.50M | 53.44M | 57.42M |
| Operating Cash Flow | 168.36M | 164.33M | 121.45M | 69.09M | 66.25M |
| Investing Cash Flow | -102.22M | -45.45M | -69.72M | -51.46M | -289.89M |
| Financing Cash Flow | 138.05M | -114.07M | -49.29M | -13.04M | 214.05M |
CSW Industrials Technical Analysis
Negative
269.98
Price Trends
299.91
Negative
272.79
Negative
281.45
Negative
Market Momentum
-2.58
Positive
31.49
Neutral
5.38
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSW, the sentiment is Negative. The current price of 269.98 is below the 20-day moving average (MA) of 312.89, below the 50-day MA of 299.91, and below the 200-day MA of 281.45, indicating a bearish trend. The MACD of -2.58 indicates Positive momentum. The RSI at 31.49 is Neutral, neither overbought nor oversold. The STOCH value of 5.38 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CSW.
CSW Industrials Risk Analysis
CSW Industrials disclosed 30 risk factors in its most recent earnings report. CSW Industrials 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
CSW Industrials Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $4.23B | 22.18 | 21.40% | 1.09% | 8.75% | 64.82% | |
71 Outperform | $4.43B | 32.21 | 10.89% | 1.06% | 5.06% | -22.73% | |
68 Neutral | $3.78B | 37.46 | 11.32% | 0.46% | -0.96% | -11.55% | |
66 Neutral | $4.45B | 36.40 | 12.02% | 0.26% | 14.87% | 15.63% | |
66 Neutral | $6.30B | 210.87 | 1.58% | ― | 7.81% | ― | |
64 Neutral | $5.03B | 58.96 | 5.80% | 0.56% | 6.44% | 101.24% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
CSW
CSW Industrials
269.98
-51.09
-15.91%
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CSW Industrials Corporate Events
Business Operations and StrategyM&A Transactions
CSW Industrials Completes Acquisition of MARS Parts
Positive
Nov 4, 2025
On November 4, 2025, CSW Industrials completed the acquisition of MARS Parts for approximately $650 million, expanding its HVAC/R product portfolio with motors, capacitors, and other components. This strategic acquisition aligns with CSW’s growth strategy by enhancing its product offerings and leveraging existing distribution channels, while maintaining strong financial health through a new credit agreement and term loan.
The most recent analyst rating on (CSW) stock is a Hold with a $259.00 price target. To see the full list of analyst forecasts on CSW Industrials stock, see the CSW 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.