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Capital Southwest
(NASDAQ:CSWC)
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Rating:70Outperform
Price Target:
$26.00
â–²(10.87% Upside)
Action:Reiterated
Date:08/04/26
CSWC scores well on earnings-call fundamentals (portfolio growth, credit quality, liquidity, and accretive capital access) and supportive valuation (low P/E with a high dividend yield). The main constraint is financial quality driven by consistently negative operating and free cash flow despite strong reported margins. Technicals add a modest tailwind with an upward trend and balanced momentum indicators.
Positive Factors
Portfolio Credit Quality
A portfolio concentrated in first-lien, sponsor-backed loans with very low nonaccruals materially lowers loss severity and supports stable cash income. This durable credit profile reduces downside in middle‑market lending and underpins predictable net investment income over months.
Negative Factors
Negative Cash Generation
Persistent negative operating and free cash flow indicate reported profits are not converting to cash, forcing reliance on financing, realizations, or capital raises to fund operations and distributions. This structural cash gap raises execution risk over a 2–6 month horizon if markets tighten.
Read all positive and negative factors
Positive Factors
Negative Factors
Portfolio Credit Quality
A portfolio concentrated in first-lien, sponsor-backed loans with very low nonaccruals materially lowers loss severity and supports stable cash income. This durable credit profile reduces downside in middle‑market lending and underpins predictable net investment income over months.
Read all positive factors
Capital Southwest (CSWC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.47B
Dividend Yield9.22%
Average Volume (3M)659.83K
Price to Earnings (P/E)11.7
Beta (1Y)0.71
Revenue Growth55.92%
EPS Growth35.62%
CountryUS
Employees36
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)2.16
Shares Outstanding62,140,724
10 Day Avg. Volume747,990
30 Day Avg. Volume659,825
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$24.17Price Target Upside3.06% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)2.28
Revenue Forecast (FY)$257.56M
Capital Southwest Business Overview & Revenue Model
Company Description
Capital Southwest Corporation operates as a business development company (BDC), specializing in credit, private equity, and venture capital investments focused on middle market companies throughout the United States. The firm engages across variou...
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:Aug 03, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Nov 02, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive operational and financial trajectory: meaningful portfolio growth (24% YoY to $2.0B), strong origination momentum, accretive ATM capital raises, conservative underwriting metrics (low leverage, 99% first-lien, 92% sponsor-backed), sustained dividend coverage, and improving operating leverage. Headwinds were relatively modest and manageable — a slight QoQ NAV decline (~0.5%), a dip in UTI to $0.87 per share, a small drop in close rate (1.7% to 1.5%), tighter market pricing, and a portion of PIK income that is nonrecurring. Overall, the positives (growth, yields, liquidity, capital access, credit quality) materially outweigh the limited negatives.Positive Updates
Strong Pretax Net Investment Income and Dividend Policy
Pretax net investment income of $35 million, or $0.57 per share for the quarter; Board declared a regular quarterly dividend of $0.58 per share and a supplemental dividend of $0.06 per share (total $0.64 per share) for the September quarter; cumulative dividend coverage of 109% since launching the credit strategy.
Negative Updates
Slight Decline in NAV per Share
Net asset value per share declined to $16.61 from $16.69 in the prior quarter (≈ -0.5% QoQ). Management attributed the decline to net realized and unrealized losses and the annual equity grant, partially offset by accretion from the ATM program.
Read all updates
Q1-2027 Updates
Positive
Negative
Strong Pretax Net Investment Income and Dividend Policy
Pretax net investment income of $35 million, or $0.57 per share for the quarter; Board declared a regular quarterly dividend of $0.58 per share and a supplemental dividend of $0.06 per share (total $0.64 per share) for the September quarter; cumulative dividend coverage of 109% since launching the credit strategy.
Read all positive updates
Company Guidance
Guidance highlights: the Board declared a $0.58 regular quarterly dividend (paid monthly) plus a $0.06 supplemental dividend (total $0.64 for the September quarter), and management expects operating leverage to remain in a 1.4%–1.5% range while adding resources; regulatory leverage finished the quarter at 0.91x debt-to-equity and the company has ~ $375M of cash and undrawn commitments (more than 1.2x coverage of $312M unfunded commitments). Management expects the near-term equity realization to increase the UTI balance (currently $0.87/share), anticipates closing roughly $250M–$300M of originations over the next ~60 days (~75% new platforms / 25% add‑ons), and reiterated a methodical plan to raise secured/unsecured debt and equity (the ATM generated $64M this quarter at a $23.47 weighted average price, ~141% of NAV). For the CapTrin JV, they closed a $150M revolver, the JV holds ~$98M in 14 companies at ~1.2x leverage, management targets a 13%–15% return once fully ramped (base ramp timeframe 18–24 months, potentially faster), and they will provide an update on a corporate credit facility amendment in the coming weeks.Capital Southwest Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
67
Positive
Cash Flow
28
Negative
| Breakdown | TTM | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 229.78M | 245.94M | 163.81M | 152.15M | 90.33M | 102.93M |
| Gross Profit | 192.12M | 231.99M | 108.85M | 109.06M | 61.45M | 83.00M |
| EBITDA | 157.79M | 193.87M | 85.28M | 88.91M | 42.82M | 49.07M |
| Net Income | 121.67M | 113.00M | 70.55M | 83.39M | 33.09M | 42.81M |
Balance Sheet | ||||||
| Total Assets | 2.32B | 2.18B | 1.88B | 1.56B | 1.26B | 973.96M |
| Cash, Cash Equivalents and Short-Term Investments | 58.46M | 29.45M | 43.22M | 32.27M | 21.59M | 11.43M |
| Total Debt | 483.86M | 1.13B | 956.07M | 770.85M | 637.64M | 528.59M |
| Total Liabilities | 1.26B | 1.17B | 999.21M | 801.08M | 667.28M | 553.09M |
| Stockholders Equity | 1.06B | 1.01B | 883.63M | 755.68M | 590.41M | 420.87M |
Cash Flow | ||||||
| Free Cash Flow | -177.81M | -193.50M | -218.92M | -188.51M | -227.38M | -184.67M |
| Operating Cash Flow | -177.36M | -193.50M | -217.26M | -188.50M | -227.10M | -182.68M |
| Investing Cash Flow | -127.66M | -286.00K | -1.67M | -13.00K | -281.00K | -2.00M |
| Financing Cash Flow | 315.33M | 178.36M | 231.52M | 199.20M | 237.53M | 164.49M |
Capital Southwest Technical Analysis
Positive
23.45
Price Trends
23.37
Positive
22.86
Positive
21.74
Positive
Market Momentum
0.21
Negative
61.29
Neutral
82.64
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSWC, the sentiment is Positive. The current price of 23.45 is below the 20-day moving average (MA) of 23.82, above the 50-day MA of 23.37, and above the 200-day MA of 21.74, indicating a bullish trend. The MACD of 0.21 indicates Negative momentum. The RSI at 61.29 is Neutral, neither overbought nor oversold. The STOCH value of 82.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
71 Outperform | $1.58B | 8.52 | 14.73% | 11.82% | 4.03% | -16.92% | |
70 Outperform | $1.47B | 11.74 | 12.13% | 9.27% | 55.92% | 35.62% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
63 Neutral | $805.67M | 10.87 | 6.57% | 15.29% | 2.31% | -35.07% | |
62 Neutral | $650.78M | -11.72 | -4.83% | 17.69% | -24.31% | -157.16% | |
59 Neutral | $694.28M | 14.06 | 4.42% | 15.44% | 15.30% | -48.57% | |
52 Neutral | $969.22M | 13.45 | 5.14% | 17.78% | 14.92% | 48.21% |
* Financial Sector Average
CSWC
Capital Southwest
24.42
4.22
20.91%
NMFC
New Mountain Finance
7.35
-1.37
-15.75%
GSBD
Goldman Sachs BDC
8.83
-0.75
-7.83%
CGBD
Carlyle Secured Lending Inc
10.28
-1.64
-13.73%
BCSF
Bain Capital Specialty Finance
12.68
-0.48
-3.66%
TRIN
Trinity Capital
17.24
3.93
29.50%
Capital Southwest Corporate Events
Business Operations and StrategyDividendsFinancial DisclosuresPrivate Placements and Financing
Capital Southwest Reports Stable Income and Dividend Increases
Positive
Aug 3, 2026
For the first fiscal quarter of 2027 ended June 30, 2026, Capital Southwest reported a total investment portfolio at fair value of $2.2 billion, including a $2.0 billion credit portfolio and $181.6 million in equity holdings, plus a $20.8 million ...
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Capital Southwest Shareholders Vote on Key Governance Matters
Neutral
Jul 22, 2026
On July 22, 2026, Capital Southwest Corporation held its 2026 Annual Meeting of Shareholders, with a quorum of nearly 45 million shares represented out of more than 62 million outstanding as of the May 26 record date. Shareholders elected six dire...
Dividends
Capital Southwest Announces Quarterly and Supplemental Dividend Plan
Positive
May 27, 2026
On May 27, 2026, Capital Southwest announced its board had declared a regular quarterly dividend totaling $0.58 per share for the quarter ending September 30, 2026, to be distributed in three equal monthly payments of $0.1934 per share in July, Au...
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...
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.