| Metric | Grade | Score | Evidence | Horizon |
|---|---|---|---|---|
| FINAL ESEN MASTER SCORE | B+ | 72 | Mid-cap BDC with attractive yield (9.8%), moderate valuation (P/E 13.1x, forward 10.6x), solid EPS growth (23.3% YoY), but analyst consensus neutral to cautious; beta 0.73 suggests lower volatility anchor. | 6-12M |
| SA Quality/Value Composite | A- | 78 | PEG 0.56 signals growth discounting; dividend yield of 9.83% attractive for income; forward P/E of 10.6x represents modest premium to rates; revenue growth +13.5% YoY shows underlying business momentum. | 6-12M |
| Zacks Earnings Momentum | B | 68 | EPS growth YoY: +23.27%; flagged as "hyper_growth" in dataset; however, forward multiples compress, suggesting marginal deceleration expected. Limited visibility on forward guidance. | 1-3M |
| Institutional & Smart Money Flow | C+ | 55 | Recent analyst downgrades and narrow consensus near current price suggest mixed institutional conviction. Analyst average $22.67–$24.88 vs. $23.61 current: marginal upside 0–5% at consensus. Benzinga consensus "Neutral"; some sources cite "Sell" consensus. | 1-3M |
| Growth Sustainability & Moat | B | 70 | BDC model with mid-market focus (limited publicly disclosed moat); 13.5% revenue CAGR is respectable but not exceptional in growth equity context. Sector: Financial Services; regulatory environment moderately stable. | 6-12M |
| Valuation & Safety (Pre-Penalty) | A- | 80 | P/E 13.1x, forward 10.6x, PEG 0.56: all indicate reasonable entry; dividend yield 9.8% provides margin of safety; week52 high $24.43, low $19.37 suggest 22% trading range; beta 0.73 = lower systematic risk. | 6-12M |
| Penalty Overlay | C | 40 | Analyst consensus near current price limits upside. Conflicting analyst signals (some Sell, some Strong Buy); limited earnings date visibility in LIVE_DATA. BDC interest-rate sensitivity poses sector-specific risk if rates decline. | 1-3M |
| CONFIDENCE SCORE | B | 73 | Data coverage adequate (P/E, forward P/E, PEG, dividend yield, growth YoY); missing forward guidance and next earnings date limits 1-month precision. Analyst consensus available but divergent. | 6-12M |
| Volatility & Drawdown Risk | A | 84 | Beta 0.73 indicates 27% lower volatility than market; week52 range $19.37–$24.43 (22% amplitude) within normal bounds for mid-cap; dividend cushion 9.8% supports downside protection. | 6-12M |
| Crowding Risk Flag | B | 68 | Modest analyst coverage (~4–8 tracked analysts); no evidence of extreme short/long skew; BDC sector moderately crowded but CSWC has specific mid-market niche; institutional flow neutral-to-cautious. | 6-12M |
Capital Southwest Corp is a mid-sized Business Development Company (BDC) operating in the Financial Services sector with a market cap of $1.48B. Within the BDC peer set, CSWC's valuation metrics (forward P/E 10.6x) position it favorably relative to growth-adjusted comps, while its dividend yield (9.8%) sits at the higher end of BDC distributions. Revenue growth of 13.5% YoY demonstrates solid portfolio company performance; however, analyst consensus clustered near current price suggests limited near-term catalyst visibility. The stock's low beta (0.73) makes it a defensive allocation within higher-beta finance, suitable for income-oriented institutional and retail portfolios.
According to 5 analysts, the average rating for CSWC stock is "Buy," with a 12-month stock price target of $24.88, which is an increase of 4.45% from the latest price. Analyst price targets range from $24.50 (high, B. Riley Securities) to $20.50 (low, UBS) , with consensus at $22.67 . This reflects modest upside potential capped by neutral institutional positioning and limited near-term catalysts.
Earnings Coverage Status: Limited visibility into quarterly earnings history. Last earnings date and Q-by-Q actuals not disclosed in current dataset.
| Metric | Value | Assessment |
|---|---|---|
| EPS (TTM) | $1.64 | Current run-rate earnings solid |
| EPS Growth YoY | +8.05% | Moderate, above-inflation growth |
| Forward P/E | 10.75x | Implies ~9.3% forward EPS growth at current price |
| Revenue Growth YoY | +13.48% | Revenue expanding faster than EPS—margin headwinds or reinvestment |
| PEG Ratio | 1.77x | Growth-adjusted valuation slightly elevated relative to 8% EPS growth |
Guidance Trend: Not disclosed in available data.
Key Observation: Revenue growth outpacing EPS growth suggests either margin pressure or strategic investments. The modest 8% EPS growth with 13.5% revenue growth warrants monitoring of operating leverage recovery.
Data Coverage: Detailed profitability metrics (gross margin, operating margin, net margin, ROIC, FCF) not available in current disclosure. Assessment based on summary flags and dividend sustainability.
| Metric | Value | Status |
|---|---|---|
| EPS | $1.64 | Solid baseline profitability |
| Dividend per Share | $2.59 | Payout ratio ~158% of TTM EPS (unsustainable at current level) |
| Dividend Yield | 9.19% | Attractive but signals income focus or potential capital return policy |
| Quality Flag (Strong Profitability) | FALSE | System flags indicate profitability constraints |
| Gross/Operating/Net Margins | N/A | Limited visibility—typical for BDC model (Capital Southwest operates as a Business Development Company) |
| ROE / ROIC | N/A | Data not disclosed |
| Free Cash Flow | N/A | Data not disclosed |
Key Observation: As a BDC, Capital Southwest's profitability structure differs from traditional corporates. The high dividend yield (9.19%) relative to modest EPS growth (8%) suggests the company may be returning capital or relying on portfolio valuations. The unsustainable dividend payout ratio warrants review of net investment income and realized gains.
Data Coverage: Detailed balance sheet (cash, debt, equity, current ratio, net debt/EBITDA) not available in current disclosure.
| Metric | Value | Assessment |
|---|---|---|
| Cash & Equivalents | N/A | Data not disclosed |
| Total Debt | N/A | Data not disclosed |
| Net Debt Position | N/A | Data not disclosed |
| Current Ratio | N/A | Data not disclosed |
| Net Debt/EBITDA | N/A | Data not disclosed |
| Interest Coverage | N/A | Data not disclosed |
| Weak Balance Sheet Flag | FALSE | System does not flag balance sheet weakness |
| Beta | 0.75 | Low systematic risk; defensive profile |
Key Observation: The system's "weak_balance" flag = FALSE, suggesting balance sheet is not materially stressed. Low beta (0.75) indicates defensive characteristics. As a BDC, Capital Southwest's capital structure typically includes leverage for portfolio investments. Detailed review of SEC filings (10-K/10-Q) recommended for leverage ratios.
| Valuation Metric | CSWC | Assessment |
|---|---|---|
| Trailing P/E | 14.26x | Fair; moderate multiple for financial services |
| Forward P/E | 10.75x | Compressed; implies 9.3% forward EPS growth at current price |
| PEG Ratio | 1.77x | Slightly elevated relative to 8% YoY EPS growth; growth not fully priced in discount |
| P/S (Price-to-Sales) | N/A | Revenue data not available for calculation |
| P/FCF (Price-to-Free Cash Flow) | N/A | FCF data not available |
| EV/EBITDA | N/A | EBITDA data not available |
| Dividend Yield vs. Cost of Capital | 9.19% | High yield suggests market pricing in capital return or capital stability concerns |
| High Valuation Flag | FALSE | System does not flag overvaluation |
Relative Context: The forward P/E of 10.75x is notably discounted to trailing (14.26x), implying market expectations of earnings expansion. The PEG of 1.77x suggests modest overvaluation relative to organic growth, though this may understate the capital return story.
Data Coverage: Wall Street consensus data (analyst rating, target price) not available in current disclosure.
| Metric | Value | Status |
|---|---|---|
| Target Price (Mean) | N/A | Not disclosed |
| Target Price (High) | N/A | Not disclosed |
| Target Price (Low) | N/A | Not disclosed |
| Consensus Rating | N/A | Not disclosed |
| Implied Upside/Downside | N/A | Cannot calculate without consensus target |
| Rating Dispersion | N/A | Not disclosed |
Fallback Assessment: Based on forward P/E compression (10.75x forward vs 14.26x trailing) and no "high_valuation" flag, the market appears modestly optimistic on earnings trajectory. The 9.88% YTD return suggests institutional acceptance of the current risk-reward.
| Risk Factor | Status | Assessment |
|---|---|---|
| Institutional Ownership Trend | N/A | Data not available; typical for mid-cap BDC to have moderate institutional presence |
| Insider Activity | N/A | Data not available |
| Short Interest | N/A | Data not available |
| Beta (Systematic Risk) | 0.75 | Low—defensive profile, lower market correlation |
| Hyper-Growth Flag | TRUE | System identifies hyper-growth characteristics (13.5% revenue growth) |
| High Valuation Flag | FALSE | No overvaluation concern flagged |
| Weak Balance Flag | FALSE | No balance sheet stress detected |
| Strong Profitability Flag | FALSE | Profitability metrics constrained; typical for BDC with high capital allocation to dividends |
| Data Gaps (Earnings, Profile2) | TRUE | Coverage gaps for earnings history and full company profile |
Key Risks:
- Dividend Sustainability: Payout ratio ~158% of TTM EPS signals reliance on investment income or portfolio gains; exposure to interest rate volatility
- BDC Model Sensitivity: As a BDC, subject to NAV volatility, credit risk in portfolio, and regulation (1940 Act); limited leverage flexibility
- Interest Rate Risk: High dividend yield (9.19%) implies sensitivity to rate environment; rising rates could compress valuation multiples
- Revenue-EPS Disconnect: 13.5% revenue growth vs. 8% EPS growth suggests margin headwinds or capital reinvestment; monitor for margin recovery
- Data Gaps: Missing quarterly earnings detail, insider activity, and detailed balance sheet limits precision of analysis
| Horizon | Outlook | Key Driver |
|---|---|---|
| Short (1-3M) | HOLD / ACCUMULATE | Dividend income + modest price appreciation; watch for rate commentary |
| Medium (6-12M) | NEUTRAL / SLIGHT UPSIDE | Revenue growth trajectory; margin recovery potential; dividend sustainability review needed |
| Long (2Y+) | CONSTRUCTIVE | BDC portfolio diversification; potential dividend growth if EPS accelerates; interest rate environment critical |
- Income Strength: 9.19% yield provides compelling income relative to peers; total return driven by dividend + modest capital appreciation
- Growth Trajectory: 8% EPS growth + 13.5% revenue growth suggest operational expansion; monitor margin recovery as top priority
- Valuation Sweet Spot: Forward P/E of 10.75x is compressed vs. trailing 14.26x; fair entry point for long-term holders
- Key Risk: Dividend payout ~158% of TTM EPS signals reliance on investment income/portfolio gains; unsustainable in downturn; rising rates a headwind
- Recommendation: BUY for income investors; suitable for portfolio diversification and defensive positioning. Initiate position on weakness or accumulate on 5-7% dips. Monitor quarterly results for margin trends and dividend policy clarity.
CSWC Stock Analysis & Forecast
Is CSWC a Good Investment in 2026?
Our model indicates a neutral outlook based on current fundamentals and momentum.
CSWC Stock Forecast
Based on recent earnings trends, valuation metrics, and sector performance, CSWC shows balanced risk-reward characteristics.
Should You Buy CSWC Now?
Investors should consider market conditions, volatility, and long-term positioning before taking a position in CSWC.