Capital Southwest (NASDAQ:CSWC) Announces Earnings Results, Misses Estimates By $0.01 EPS

Capital Southwest (NASDAQ:CSWC) issued its quarterly earnings data on Monday. The asset manager reported $0.56 EPS for the quarter, missing analysts’ consensus estimates of $0.57 by ($0.01), Zacks reports. The business had revenue of $67.16 million during the quarter, compared to the consensus estimate of $65.61 million. Capital Southwest had a return on equity of 14.05% and a net margin of 43.06%.

Capital Southwest Trading Down 0.8%

Shares of Capital Southwest stock opened at $23.25 on Wednesday. Capital Southwest has a 12-month low of $19.91 and a 12-month high of $25.75. The firm’s 50 day simple moving average is $23.65 and its two-hundred day simple moving average is $23.40. The company has a current ratio of 0.17, a quick ratio of 0.17 and a debt-to-equity ratio of 0.62. The firm has a market capitalization of $1.48 billion, a price-to-earnings ratio of 9.97 and a beta of 0.67.

Capital Southwest Announces Dividend

The business also recently announced a monthly dividend, which will be paid on Thursday, December 31st. Investors of record on Tuesday, December 15th will be paid a $0.1934 dividend. The ex-dividend date is Tuesday, December 15th. This represents a $2.32 dividend on an annualized basis and a yield of 10.0%. Capital Southwest’s dividend payout ratio (DPR) is 128.18%.

Analyst Ratings Changes

CSWC has been the topic of a number of analyst reports. Weiss Ratings downgraded Capital Southwest from a “buy (b)” rating to a “buy (b-)” rating in a report on Tuesday, October 13th. Citigroup reaffirmed a “market outperform” rating on shares of Capital Southwest in a research report on Wednesday, August 5th. UBS Group lifted their target price on Capital Southwest from $23.50 to $24.00 and gave the company a “neutral” rating in a research note on Friday, October 9th. Citizens Jmp lifted their target price on Capital Southwest from $25.00 to $26.00 and gave the company a “market outperform” rating in a research note on Wednesday, August 5th. Finally, B. Riley Financial boosted their target price on shares of Capital Southwest from $24.50 to $25.50 and gave the stock a “buy” rating in a report on Wednesday, August 5th. Six investment analysts have rated the stock with a Buy rating and two have given a Hold rating to the stock. Based on data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and an average target price of $24.62.

Insider Buying and Selling at Capital Southwest

In other news, Director William Thomas, III bought 2,170 shares of the business’s stock in a transaction that occurred on Thursday, October 1st. The shares were purchased at an average cost of $23.04 per share, with a total value of $49,996.80. Following the transaction, the director directly owned 22,842 shares in the company, valued at approximately $526,279.68. The trade was a 10.50% increase in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is accessible through the SEC website. 2.70% of the stock is owned by company insiders.

Key Stories Impacting Capital Southwest

Here are the key news stories impacting Capital Southwest this week:

• Positive Sentiment: CSWC recorded a quarterly-high $391 million in originations across 30 portfolio companies. Its $2.4 billion portfolio was primarily senior secured debt, with 99% of the credit portfolio in first-lien loans and a 10.9% weighted-average debt yield. Capital Southwest Q2 results
• Positive Sentiment: The company paid $0.64 per share in regular and supplemental dividends and reported estimated undistributed taxable income of $0.92 per share, providing a potential cushion for future distributions. Capital Southwest Q2 results
• Neutral Sentiment: Revenue of $67.16 million exceeded analyst expectations of $65.61 million, while portfolio growth and originations were tempered by margin compression. CSWC Q3 deep dive
• Negative Sentiment: Reported earnings per share of $0.56 were a penny below consensus. Net depreciation was $13.4 million, including $14.6 million of credit-portfolio depreciation; non-accrual investments were $34.8 million at fair value, or 1.4% of the portfolio. Capital Southwest Q2 results
• Negative Sentiment: A new disclosure highlights potential legal exposure related to CSWC’s 2029 convertible notes, raising uncertainty about possible costs and shareholder value. Legal risks around convertible notes

About Capital Southwest

Capital Southwest Corporation (NASDAQ: CSWC) is a business development company that provides financing to middle-market and lower-middle-market businesses in the United States. The company primarily invests in privately held companies that may require capital to support growth, acquisitions, recapitalizations, ownership transitions, or other strategic initiatives.

Its investment portfolio generally consists of senior secured loans, including first-lien and second-lien debt, as well as subordinated debt and equity investments.