Capital Southwest (CSWC) AI Stock Analysis

• Market Cap: $1.26B
• Dividend Yield: 12.03%
• Average Volume (3M): 511.40K
• Price to Earnings (P/E): 14.3
• Beta (1Y): 0.57
• Revenue Growth: 12.82%
• EPS Growth: -5.37%
• Country: US
• Employees: 27
• Sector: Financial
• Sector Strength: 71
• Industry: Asset Management
• EPS (TTM): 0.59
• Shares Outstanding: 55,628,456
• 10 Day Avg. Volume: 542,047
• 30 Day Avg. Volume: 511,405
• PEG Ratio: -0.53
• Price to Book (P/B): 1.20
• Price to Sales (P/S): 6.71
• P/FCF Ratio: -4.87
• Enterprise Value/Market Cap: 1.80
• Enterprise Value/Revenue: 11.08
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $24.50
• Price Target Upside: 7.46% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 76 Outperform
• Price Target: $26.00 ▲(14.04% Upside)

Capital Southwest's strong financial performance and strategic initiatives, including increased dividends and robust origination pipeline, are significant strengths. However, challenges in cash flow management and competitive pressures on loan spreads are notable risks. The stock's reasonable valuation and high dividend yield further support its attractiveness.

Positive Factors

Earnings

Capital Southwest reported solid earnings with interest and dividend income totaling $47M, and fee income rising significantly compared to the previous quarter.

Investment Portfolio

The investment portfolio increased 13% sequentially to $1.70B, driven by strong originations, which is a positive indication of growth.

Negative Factors

Base Rates and Yields

Lower base rates are putting downward pressure on portfolio yields, which is a challenge for CSWC.

Market Competition

Competition across the industry remains fierce, putting pressure on spreads in the direct lending market.

Capital Southwest Business Overview & Revenue Model

Company Description

Capital Southwest Corporation (CSWC) is a publicly traded business development company (BDC) that primarily focuses on providing customized financing solutions to lower middle-market companies in the United States. The company invests in various sectors, including healthcare, technology, manufacturing, and services, by offering debt and equity capital to support growth and operational needs. CSWC aims to generate attractive risk-adjusted returns for its investors while supporting the development of its portfolio companies through tailored financial solutions and strategic guidance.

How the Company Makes Money

Capital Southwest generates revenue primarily through interest income from its debt investments and capital gains from its equity investments in portfolio companies. The company typically provides loans in the form of senior secured debt, subordinated debt, or equity co-investments, which yield interest payments that contribute to its revenue stream. Additionally, CSWC earns management fees from its investment activities and may receive incentive fees based on the performance of its investments. The company focuses on building long-term relationships with its portfolio companies, often engaging in follow-on investments as these companies grow. Key partnerships with financial advisors, business owners, and industry experts also enhance its deal flow and investment opportunities, thereby contributing to its overall earnings potential.

Capital Southwest Financial Statement Overview

Summary

Capital Southwest demonstrates strong revenue growth and profitability, supported by efficient cost management and operational effectiveness. However, cash flow management presents a significant challenge, with negative free cash flow and reliance on external financing. The balance sheet reflects a stable yet leveraged position.

Income Statement

Capital Southwest has shown impressive revenue growth with a significant increase from 2024 to 2025. The gross and net profit margins are strong, indicating efficient management of costs relative to revenues. EBIT and EBITDA margins are also robust, reflecting effective operational control. However, the historical volatility in revenue growth may denote potential challenges in sustaining this trajectory.

Balance Sheet

The company maintains a moderate debt-to-equity ratio, suggesting a balanced approach to leveraging debt and equity. The return on equity is commendable, indicating solid profitability for shareholders. The equity ratio implies a stable asset financing structure, yet the relatively high liabilities compared to equity could pose risks if financial conditions worsen.

Cash Flow

Capital Southwest faces challenges in cash flow management, with negative operating and free cash flows indicating potential liquidity issues. The operating cash flow to net income ratio shows inconsistency, suggesting a need for improved cash generation efficiency. Positive financing cash flow reflects reliance on external funding, which might not be sustainable long-term.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	204.44M	157.73M	138.53M	90.33M	83.00M	72.58M
Gross Profit	0.00	204.44M	109.06M	58.70M	80.77M	72.58M
EBITDA	0.00	140.64M	88.91M	71.69M	65.46M	57.53M
Net Income	113.99M	70.55M	83.39M	33.09M	42.81M	50.88M
Balance Sheet
Total Assets	1.88B	1.88B	1.56B	1.26B	973.96M	735.58M
Cash, Cash Equivalents and Short-Term Investments	43.22M	43.22M	32.27M	21.59M	11.43M	31.61M
Total Debt	956.07M	961.47M	774.05M	637.64M	528.59M	381.30M
Total Liabilities	999.21M	999.21M	801.08M	667.28M	553.09M	399.33M
Stockholders Equity	883.63M	883.63M	755.68M	590.41M	420.87M	336.25M
Cash Flow
Free Cash Flow	-217.26M	-217.26M	-188.51M	-227.38M	-184.67M	-68.25M
Operating Cash Flow	-217.26M	-217.26M	-188.50M	-227.10M	-182.68M	-68.25M
Investing Cash Flow	-1.67M	-1.67M	-13.00K	-281.00K	-2.00M	-103.92M
Financing Cash Flow	231.52M	231.52M	199.20M	237.53M	164.49M	86.12M

Capital Southwest Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 22.80
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 22.8 is below the 20-day moving average (MA) of 22.91, above the 50-day MA of 21.99, and above the 200-day MA of 20.99, indicating a neutral trend. The MACD of 0.15 indicates Positive momentum. The RSI at 55.24 is Neutral, neither overbought nor oversold. The STOCH value of 69.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CSWC.

Capital Southwest Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSWC	76 Outperform	$1.26B	14.26	9.74%	12.03%	12.82%	-5.37%
TRIN	74 Outperform	$1.11B	7.06	17.31%	12.85%	31.43%	30.85%
SLRC	71 Outperform	$897.42M	10.10	8.95%	9.97%	5.87%	-12.64%
PFLT	70 Outperform	$1.03B	12.33	7.37%	11.87%	55.25%	-47.99%
Sector *	68 Neutral	$17.46B	11.65	10.44%	3.86%	10.36%	1.15%
BCSF	66 Neutral	$983.41M	9.12	9.42%	11.87%	-3.29%	-16.86%
NMFC	65 Neutral	$1.09B	13.52	6.18%	12.64%	39.05%	-32.62%

Capital Southwest Corporate Events

Capital Southwest Announces Q1 2025 Financial Results

On August 6, 2025, Capital Southwest announced its financial results for the first fiscal quarter ended June 30, 2025. The company reported a total investment portfolio of $1.8 billion, with a credit portfolio of $1.6 billion and an equity portfolio of $166.2 million. The quarter saw $113.4 million in new committed credit investments and $1.8 million in new equity co-investments. Pre-tax net investment income was $32.7 million, and the company paid a total of $0.64 per share in dividends. The results reflect a strengthening balance sheet and a conservative underwriting approach, with non-accruals representing less than 1% of the portfolio. The company also announced a change in its dividend payment frequency from quarterly to monthly, aiming to enhance shareholder value.

The most recent analyst rating on (CSWC) stock is a Buy with a $23.00 price target. To see the full list of analyst forecasts on Capital Southwest stock, see the CSWC Stock Forecast page.

Capital Southwest Holds 2025 Annual Shareholder Meeting

On July 24, 2025, Capital Southwest Corporation held its 2025 Annual Meeting of Shareholders, where shareholders voted on several key proposals. These included the election of six directors, approval of executive compensation, an amendment to the 2021 Employee Restricted Stock Award Plan, and the ratification of RSM US LLP as the independent accounting firm for the fiscal year ending March 31, 2026. The successful approval of these proposals indicates continued shareholder support for the company’s strategic direction and governance, potentially impacting its operational and financial strategies positively.

The most recent analyst rating on (CSWC) stock is a Buy with a $23.00 price target. To see the full list of analyst forecasts on Capital Southwest stock, see the CSWC Stock Forecast page.

Capital Southwest Shifts to Monthly Dividends

On June 11, 2025, Capital Southwest Corporation announced a transition from quarterly to monthly dividend payments, starting in July 2025. The company declared total dividends of $0.64 per share for the quarter ending September 30, 2025, which includes monthly regular dividends of $0.1934 per share for July, August, and September, and a supplemental dividend of $0.06 per share payable in September. This change is seen as a shareholder-friendly initiative, reflecting the company’s strong earnings and credit quality, and is expected to benefit all shareholders.

The most recent analyst rating on (CSWC) stock is a Buy with a $23.00 price target. To see the full list of analyst forecasts on Capital Southwest stock, see the CSWC Stock Forecast page.

Capital Southwest Reports Strong Q4 2025 Financial Results

Capital Southwest Corporation announced its financial results for the fourth fiscal quarter and year ended March 31, 2025. The company reported a total investment portfolio of $1.8 billion, with significant growth in both credit and equity portfolios. The firm generated a pre-tax net investment income of $28.5 million for the quarter and paid dividends totaling $0.64 per share. The company also increased its borrowing capacity and received a license to operate a second SBIC subsidiary, enhancing its access to cost-effective debt capital. These developments indicate a strong financial performance and strategic positioning for future growth.

The most recent analyst rating on (CSWC) stock is a Hold with a $21.00 price target. To see the full list of analyst forecasts on Capital Southwest stock, see the CSWC Stock Forecast page.