Capital Southwest (CSWC)
NASDAQ:CSWC
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Capital Southwest
(NASDAQ:CSWC)
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Rating:65Neutral
Price Target:
$25.00
▲(2.88% Upside)
Action:Downgraded
Date:05/20/26
The score is held back primarily by weak cash generation (consistently negative operating and free cash flow) despite strong reported profitability. Support comes from attractive income/valuation (high dividend yield with moderate P/E) and a constructive earnings-call outlook on dividend sustainability, credit quality, and liquidity, while technical signals are mixed in the near term.
Positive Factors
Portfolio & Investment Income Growth
A 17% portfolio expansion and 14% investment income increase reflect durable origination capacity and scale in middle‑market lending. Sustained originations improve diversification, recurring interest income and the potential to compound net investment income over the next 2–6 months.
Negative Factors
Persistent Negative Operating Cash Flow
Consistent negative operating and free cash flow means accounting earnings are not translating into cash, forcing dependence on external funding and ATM issuance to meet obligations. This structural cash conversion gap raises liquidity and financing risk over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Portfolio & Investment Income Growth
A 17% portfolio expansion and 14% investment income increase reflect durable origination capacity and scale in middle‑market lending. Sustained originations improve diversification, recurring interest income and the potential to compound net investment income over the next 2–6 months.
Read all positive factors
Capital Southwest (CSWC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.41B
Dividend Yield11.9%
Average Volume (3M)711.59K
Price to Earnings (P/E)11.6
Beta (1Y)0.74
Revenue Growth55.92%
EPS Growth35.62%
CountryUS
Employees27
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)2.08
Shares Outstanding62,140,724
10 Day Avg. Volume653,001
30 Day Avg. Volume711,590
Financial Highlights & Ratios
PEG Ratio0.32
Price to Book (P/B)1.24
Price to Sales (P/S)5.08
P/FCF Ratio-6.46
Enterprise Value/Market Cap1.78
Enterprise Value/Revenue11.33
Enterprise Value/Gross Profit14.57
Enterprise Value/Ebitda17.63
Forecast
1Y Price Target
$22.75Price Target Upside-6.38% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)2.3
Revenue Forecast (FY)$257.77M
Capital Southwest Business Overview & Revenue Model
Company Description
Capital Southwest Corporation is a business development company specializing in credit and private equity and venture capital investments in middle market companies, mezzanine, later stage, mature, late venture, emerging growth, buyouts, recapital...
How the Company Makes Money
CSWC makes money primarily from investment income generated by its portfolio of debt and equity investments in middle-market companies.
1) Interest income on debt investments (core revenue stream)
- The largest component of CSWC’s earnings is typ...
Capital Southwest Earnings Call Summary
Earnings Call Date:May 13, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Aug 10, 2026
Earnings Call Sentiment Positive
The call conveyed a broadly positive operational and financial performance: strong portfolio growth (17%), solid investment income growth (14% YoY), industry-leading 40% ROE, improving credit metrics (nonaccruals down to 1.1%), a growing UTI balance ($1.07/share) and diversified capital raising. Challenges were largely tactical or market-driven (quarterly NAV dip, a single meaningful write-down, a modest quarter-to-quarter investment income decline due to lower SOFR, and a moderated close rate). Overall, the positive developments — including robust capital raises, conservative underwriting, liquidity strength, and expected realized gains — materially outweigh the contained headwinds reported on the call.Positive Updates
Portfolio Growth
Investment portfolio grew approximately $300 million or 17% year-over-year from $1.8 billion to $2.1 billion, driven by $762 million in new committed investment originations during fiscal 2026.
Negative Updates
Quarterly NAV and Valuation Pressures
NAV per share was essentially unchanged year-over-year (ended fiscal year at $16.69 vs $16.70 prior year) and decreased from $16.75 the prior quarter to $16.69, with the quarter's NAV decline driven by net realized and unrealized depreciation and market multiple compression.
Read all updates
Q4-2026 Updates
Positive
Negative
Portfolio Growth
Investment portfolio grew approximately $300 million or 17% year-over-year from $1.8 billion to $2.1 billion, driven by $762 million in new committed investment originations during fiscal 2026.
Read all positive updates
Company Guidance
On the call management provided concrete near-term guidance: the Board declared June-quarter dividends of $0.58 per share paid monthly plus a $0.06 supplemental (total $0.64), said they expect to continue paying supplemental dividends over time supported by $1.07 of UTI per share and $37.8M ($0.62/sh) of unrealized equity appreciation that they expect to harvest in FY2027, and reaffirmed dividend sustainability (FY26 total dividends $2.56 vs $2.54 prior year; cumulative dividend coverage 109%). They expect operating leverage to remain in the 1.4%–1.5% range, target regulatory leverage of 0.85x–0.95x (ended the quarter at 0.9x), and will keep a conservative leverage cushion while opportunistically raising secured/unsecured debt and equity (yearly debt raises included $350M bond at 5.9%, $90M SBIC leverage, $25M secured; ATM equity proceeds were ~$160M at 1.3x NAV, $25M this quarter at 138% NAV). For the CapTrin JV they aim for ~2x+ leverage, expect a full ramp in ~18–24 months with a 13%–14% return when fully ramped (double-digit/~11% contribution possible within ~6 months) and target $30M–$40M of originations per quarter; liquidity remains strong (~$394M cash and undrawn commitments + $42M SBA = >1.3x coverage of $329M unfunded commitments).Capital Southwest Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
63
Positive
Cash Flow
28
Negative
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 245.94M | 163.81M | 152.15M | 90.33M | 102.93M |
| Gross Profit | 231.99M | 108.85M | 109.06M | 61.45M | 83.00M |
| EBITDA | 193.87M | 85.28M | 88.91M | 42.82M | 49.07M |
| Net Income | 113.00M | 70.55M | 83.39M | 33.09M | 42.81M |
Balance Sheet | |||||
| Total Assets | 2.18B | 1.88B | 1.56B | 1.26B | 973.96M |
| Cash, Cash Equivalents and Short-Term Investments | 29.45M | 43.22M | 32.27M | 21.59M | 11.43M |
| Total Debt | 1.13B | 956.07M | 770.85M | 637.64M | 528.59M |
| Total Liabilities | 1.17B | 999.21M | 801.08M | 667.28M | 553.09M |
| Stockholders Equity | 1.01B | 883.63M | 755.68M | 590.41M | 420.87M |
Cash Flow | |||||
| Free Cash Flow | -193.50M | -218.92M | -188.51M | -227.38M | -184.67M |
| Operating Cash Flow | -193.50M | -217.26M | -188.50M | -227.10M | -182.68M |
| Investing Cash Flow | -286.00K | -1.67M | -13.00K | -281.00K | -2.00M |
| Financing Cash Flow | 178.36M | 231.52M | 199.20M | 237.53M | 164.49M |
Capital Southwest Technical Analysis
Neutral
24.30
Price Trends
22.78
Negative
22.41
Positive
21.32
Positive
Market Momentum
0.02
Positive
42.04
Neutral
8.54
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSWC, the sentiment is Neutral. The current price of 24.3 is above the 20-day moving average (MA) of 23.51, above the 50-day MA of 22.78, and above the 200-day MA of 21.32, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 42.04 is Neutral, neither overbought nor oversold. The STOCH value of 8.54 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CSWC.
Capital Southwest Risk Analysis
Capital Southwest disclosed 60 risk factors in its most recent earnings report. Capital Southwest 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
Capital Southwest Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $1.48B | 6.76 | 14.73% | 13.53% | 4.03% | -16.92% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
65 Neutral | $1.41B | 11.63 | 11.68% | 11.90% | 55.92% | 35.62% | |
60 Neutral | $856.91M | 59.32 | 6.57% | 13.18% | 2.31% | -35.07% | |
59 Neutral | $749.95M | ― | -4.83% | 14.17% | -24.31% | -157.16% | |
56 Neutral | $742.23M | ― | 4.42% | 13.63% | 15.30% | -48.57% | |
52 Neutral | $997.36M | -18.33 | 5.14% | 17.34% | 14.92% | 48.21% |
* Financial Sector Average
CSWC
Capital Southwest
22.77
4.74
26.30%
NMFC
New Mountain Finance
7.94
-1.28
-13.88%
GSBD
Goldman Sachs BDC
8.86
-0.40
-4.34%
CGBD
Carlyle Secured Lending Inc
10.68
-1.46
-12.06%
BCSF
Bain Capital Specialty Finance
13.21
-0.18
-1.36%
TRIN
Trinity Capital
16.49
4.13
33.41%
Capital Southwest Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Capital Southwest Doubles ATM Equity Offering Capacity
Positive
May 19, 2026
Capital Southwest Corporation has expanded its at-the-market equity offering program, originally established on March 4, 2019, which allows it to issue common stock from time to time through several sales agents. The company maintains flexibility ...
Business Operations and StrategyDividendsFinancial DisclosuresPrivate Placements and Financing
Capital Southwest Posts Strong Fiscal Q4 and Year-End Results
Positive
May 13, 2026
On May 13, 2026, Capital Southwest reported results for its fourth fiscal quarter and fiscal year ended March 31, 2026, highlighting a $2.1 billion investment portfolio anchored by $1.9 billion of largely first-lien senior secured loans and $181 m...
Business Operations and StrategyDividends
Capital Southwest Declares Q2 2026 Dividends and Supplemental Payout
Positive
Feb 25, 2026
On February 25, 2026, Capital Southwest Corporation announced that its board declared monthly regular dividends of $0.1934 per share for April, May and June 2026 and a quarterly supplemental dividend of $0.06 per share payable on June 30, 2026. Th...
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.