Capital Southwest (CSWC) AI Stock Analysis

• Market Cap: $1.17B
• Dividend Yield: 10.82%
• Average Volume (3M): 427.99K
• Price to Earnings (P/E): 14.5
• Beta (1Y): 0.52
• Revenue Growth: 13.86%
• EPS Growth: -29.53%
• Country: US
• Employees: 27
• Sector: Financial
• Sector Strength: 79
• Industry: Asset Management
• EPS (TTM): 0.54
• Shares Outstanding: 54,816,880
• 10 Day Avg. Volume: 415,560
• 30 Day Avg. Volume: 427,988
• PEG Ratio: 0.45
• Price to Book (P/B): 1.20
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -4.87
• Enterprise Value/Market Cap: 1.21
• Enterprise Value/Revenue: 2.12
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: 3.57
• 1Y Price Target: $21.75
• Price Target Upside: 2.06% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 74 Outperform
• Price Target: $23.50 ▲(10.28%Upside)

Capital Southwest's overall score reflects its strong financial performance and attractive valuation, emphasized by consistent dividend payments and strategic growth initiatives. Technical indicators suggest stable market positioning, though cash flow challenges require monitoring. Positive earnings call sentiment and corporate events further bolster the company's outlook.

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 Dallas, Texas-based business development company that provides capital to support the acquisition and growth of small to mid-sized businesses. Operating primarily in the lower middle market sector, CSWC specializes in offering flexible financing solutions that include senior and subordinated debt, as well as equity co-investments. The company's investment portfolio spans various industries, with a focus on generating income and capital appreciation for its shareholders.

How the Company Makes Money

Capital Southwest makes money through interest income from its debt investments and capital gains from its equity investments. The company generates revenue by providing loans and making equity investments in small to mid-sized businesses, which pay interest or dividends back to CSWC. Additionally, the firm may realize capital gains when it exits equity investments at a higher valuation. CSWC manages its portfolio to maintain a balance between risk and return, often partnering with other financial institutions to diversify risk and enhance deal flow. The company's revenue is significantly influenced by the performance of its portfolio companies, market interest rates, and overall economic conditions.

Capital Southwest Financial Statement Overview

Summary

Capital Southwest shows strong revenue growth and profitability, backed by efficient cost and operational management. However, cash flow issues, with negative free cash flow and reliance on external financing, are concerning. The balance sheet is stable but leveraged, necessitating attention to liquidity and cash flow generation.

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
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
204.44M	138.53M	90.33M	83.00M	72.58M
	Gross Profit
204.44M	109.06M	58.70M	80.77M	72.58M
	EBIT
120.45M	84.60M	40.07M	46.84M	55.56M
	EBITDA
181.27M	88.91M	71.69M	65.46M	57.53M
	Net Income Common Stockholders
118.18M	83.39M	33.09M	42.81M	50.88M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
43.22M	32.27M	21.59M	11.43M	31.61M
	Total Assets
1.88B	1.56B	1.26B	973.96M	735.58M
	Total Debt
394.02M	774.05M	637.64M	528.59M	381.30M
	Net Debt
350.80M	741.78M	616.06M	517.16M	349.69M
	Total Liabilities
999.21M	801.08M	667.28M	553.09M	399.33M
	Stockholders Equity
883.63M	755.68M	590.41M	420.87M	336.25M
Cash Flow		Free Cash Flow
-217.26M	-188.51M	-227.38M	-184.67M	-68.25M
	Operating Cash Flow
-217.26M	-188.50M	-227.10M	-182.68M	-68.25M
	Investing Cash Flow
-1.67M	-13.00K	-281.00K	-2.00M	-103.92M
	Financing Cash Flow
231.52M	199.20M	237.53M	164.49M	86.12M

Capital Southwest Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 21.31
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 21.31 is above the 20-day moving average (MA) of 20.95, above the 50-day MA of 20.43, and below the 200-day MA of 21.90, indicating a neutral trend. The MACD of 0.15 indicates Negative momentum. The RSI at 59.63 is Neutral, neither overbought nor oversold. The STOCH value of 85.31 is Negative, 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	74 Outperform	$1.17B	14.52	8.52%	10.82%	13.86%	-29.53%
TRIN	73 Outperform	$943.90M	6.66	17.56%	13.92%	46.14%	34.91%
SLRC	71 Outperform	$927.97M	10.57	8.86%	9.70%	14.33%	25.35%
PFLT	70 Outperform	$1.04B	11.65	7.59%	11.76%	93.63%	24.41%
BCSF	66 Neutral	$1.01B	8.95	9.87%	10.74%	12.24%	-3.21%
NMFC	65 Neutral	$1.17B	10.92	8.11%	11.82%	-3.55%	-20.43%
Sector *	64 Neutral	$12.83B	9.78	7.78%	16985.64%	12.26%	-7.81%

Capital Southwest Corporate Events

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.

Capital Southwest Announces Regular and Supplemental Dividends

On April 28, 2025, Capital Southwest Corporation announced a regular dividend of $0.58 per share and a supplemental dividend of $0.06 per share for the quarter ending June 30, 2025. The dividends will be payable on June 30, 2025, with an ex-dividend date of June 13, 2025. This announcement reflects the company’s ongoing commitment to providing returns to its shareholders, supported by its dividend reinvestment plan, which allows registered stockholders to reinvest dividends into additional shares.