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Capital Southwest
(NASDAQ:CSWC)
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Rating:65Neutral
Price Target:
$26.00
â–²(3.13% Upside)
Action:Reiterated
Date:09/16/26
The score is primarily constrained by weak cash-flow quality despite strong reported profitability and an improving leverage profile. Earnings-call and corporate updates are supportive (origination momentum, conservative credit quality, improved funding flexibility), while technical indicators remain soft. Valuation is a notable offset, with a moderate P/E and very high dividend yield.
Positive Factors
Secured, diversified credit portfolio
The portfolio’s heavy concentration in first-lien senior secured loans and small average positions provides structural downside protection and diversification. Sponsor backing and seniority can support recoveries, while broad exposure across borrowers reduces the effect of any single credit problem.
Negative Factors
Profits are not converting to cash
Persistently negative operating and free cash flow weaken earnings quality because reported profits are not translating into internally generated cash. This can increase reliance on borrowings, equity issuance, or portfolio repayments to fund operations, investments, and shareholder distributions.
Read all positive and negative factors
Positive Factors
Negative Factors
Secured, diversified credit portfolio
The portfolio’s heavy concentration in first-lien senior secured loans and small average positions provides structural downside protection and diversification. Sponsor backing and seniority can support recoveries, while broad exposure across borrowers reduces the effect of any single credit problem.
Read all positive factors
Capital Southwest (CSWC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.43B
Dividend Yield11.45%
Average Volume (3M)559.82K
Price to Earnings (P/E)11.7
Beta (1Y)0.76
Revenue Growth25.04%
EPS Growth13.84%
CountryUS
Employees36
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)1.98
Shares Outstanding63,733,868
10 Day Avg. Volume524,923
30 Day Avg. Volume559,821
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 Cap1.99
Enterprise Value/Revenue12.37
Enterprise Value/Gross Profit14.80
Enterprise Value/Ebitda18.02
Forecast
1Y Price Target
$24.13Price Target Upside-4.30% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering4
EPS Forecast (FY)2.32
Revenue Forecast (FY)$266.45M
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 by earning investment income from its portfolio of loans and other investments. The core revenue stream is interest income on debt investments (most commonly senior secured loans); this includes contractual coupon intere...
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 | 157.74M | 193.87M | 85.28M | 88.91M | 42.82M | 49.07M |
| Net Income | 110.73M | 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
Negative
25.21
Price Trends
23.66
Negative
23.31
Negative
22.41
Negative
Market Momentum
-0.27
Positive
33.21
Neutral
8.19
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSWC, the sentiment is Negative. The current price of 25.21 is above the 20-day moving average (MA) of 23.07, above the 50-day MA of 23.66, and above the 200-day MA of 22.41, indicating a bearish trend. The MACD of -0.27 indicates Positive momentum. The RSI at 33.21 is Neutral, neither overbought nor oversold. The STOCH value of 8.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CSWC.
Capital Southwest Risk Analysis
Capital Southwest disclosed 2 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 1 New Risks
1.
Additional Risks Associated with the 2029 Convertible Notes Q2, 2026
Capital Southwest Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $4.98B | 10.75 | 14.81% | 8.12% | 3.49% | -18.26% | |
73 Outperform | $733.77M | 8.75 | 10.54% | 14.82% | 3.27% | -9.84% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $413.91M | 8.56 | 10.19% | 11.35% | -38.83% | -36.61% | |
65 Neutral | $1.43B | 11.71 | 11.04% | 11.45% | 25.04% | 13.84% | |
63 Neutral | $586.98M | 3.53 | 27.00% | 6.50% | -57.47% | 92.94% | |
47 Neutral | $221.10M | -54.76 | -1.08% | 23.74% | -10.96% | -110.82% |
* Financial Sector Average
CSWC
Capital Southwest
22.38
3.94
21.39%
FDUS
Fidus Investment
18.67
0.22
1.21%
GLAD
Gladstone Capital
18.60
0.82
4.61%
GAIN
Gladstone Investment
14.78
1.62
12.30%
MAIN
Main Street Capital
54.10
0.76
1.42%
SAR
Saratoga Investment
13.86
-5.64
-28.93%
Capital Southwest Corporate Events
Business Operations and StrategyPrivate Placements and FinancingRegulatory Filings and Compliance
Capital Southwest Completes $350 Million Unsecured Notes Offering
Positive
Sep 15, 2026
On September 10, 2026, Capital Southwest Corporation entered an underwriting agreement with a syndicate of banks to issue $350 million of 6.750% unsecured notes due 2031, and on September 15, 2026 it executed a supplemental indenture with U.S. Ban...
Business Operations and StrategyPrivate Placements and Financing
Capital Southwest Expands Credit Facility, Extends Debt Maturities
Positive
Sep 2, 2026
On September 2, 2026, Capital Southwest Corporation amended its senior secured revolving Corporate Credit Facility, expanding lender commitments from $510 million to $595 million and increasing the uncommitted accordion feature to allow for up to ...
Business Operations and StrategyShareholder Meetings
Capital Southwest Expands Authorized Shares for Growth Flexibility
Positive
Sep 1, 2026
On September 1, 2026, Capital Southwest shareholders approved an amendment to the company’s charter to raise its authorized common stock from 75 million to 135 million shares, following a reconvened 2026 annual meeting initially held on July...
Business Operations and StrategyDividends
Capital Southwest Announces Quarterly and Supplemental Dividends
Positive
Aug 27, 2026
On August 27, 2026, Capital Southwest Corporation announced that its board had declared a quarterly regular dividend totaling $0.58 per share for the quarter ended December 31, 2026, to be paid in three equal monthly installments of $0.1934 per sh...
Business Operations and StrategyPrivate Placements and Financing
Capital Southwest Expands At-The-Market Equity Program
Positive
Aug 7, 2026
On August 7, 2026, Capital Southwest Corporation expanded its at-the-market equity offering program, originally established in March 2019, by appointing RBC Capital Markets, LLC as an additional sales agent alongside Jefferies LLC, Raymond James ...
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...
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.