Capital Southwest Valuation Analysis
| CSWC Stock | USD 23.54 -0.34 -1.42% |
Below Model Estimate
Today
The intrinsic value estimate for Capital Southwest is based on a 3 months horizon. Extending the time horizon generally improves valuation stability.
The most reliable valuation for Capital Southwest emerges when intrinsic-value models and market multiples point in the same direction. Some managers use Capital Southwest's intrinsic value based on ongoing forecasts of Capital Southwest's financial statements. The goal is to estimate Capital Southwest's intrinsic worth with reasonable confidence.
Main Profitability Drivers
Capital Southwest's net margin stands at 47.00%, with operating margin at 87.00%. Below the operating line, items like interest and taxes compress Capital Southwest's margin by about 40.00 percentage points. From $163.81 million in revenue, Capital Southwest retained $226.74 million after cost of goods and reported $70.55 million in net income. With ROE at 5.50% and ROA at 3.75%, these return measures help contextualize Capital Southwest's profitability relative to its balance sheet. Capital Southwest's profitability picture is mixed, with some metrics improving while others show pressure. For a deeper look, explore Capital Southwest's profitability breakdown.
Price Book 1.44 | Gross Profit | Price Sales 6.34 | Profit Margin | Enterprise Value Revenue 16.78 |
Capital Southwest Cash | $43.55 million |
Cash stood at $49.7 million as of December 31, 2025.
As a financial institution generating revenue through lending, deposits, and interest rate spreads, Capital Southwest's financial profile reflects the economics of that model. As an income-oriented stock in Capital Markets, its dividend characteristics are relevant to income-focused portfolios. Below, the key valuation drivers are examined to determine what the market is pricing and whether the underlying data supports it.
Total Value Analysis
From a capital-structure perspective, Capital Southwest is being framed with enterprise value of 1.75 billion, market capitalization of 1.44 billion, debt obligations near 956.07 million, and cash-equivalent resources of 18.77 million as of latest reporting. Reviewing Capital Southwest fundamentals clarifies whether the enterprise-value composition reflects durable capital structure or temporary balance-sheet effects.| Takeover Price | Market Cap | Debt Obligations | Cash & Equivalents |
1.75 billion | 1.44 billion | 956.07 million | 18.77 million |
Investor Information
About 30.0% of CSWC shares are held by institutions such as insurance companies. CSWC has price-to-book (P/B) ratio of 1.44. Equities trading at this Price to Book (P/B) range reflect investor confidence in earnings power beyond book value. Capital Southwest had its last dividend issued on the 15th of May 2026. CSWC completed a 2-for-1 stock split on 1st of October 2015. Capital Southwest integrates capital discipline with moderate financial flexibility with thin profitability. Asset returns are positive but modest, indicating room for margin improvement.Asset Utilization
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Capital Southwest has an asset utilization ratio of 8.7 percent. This indicates that the Company is making $0.087 for each dollar of assets. An increasing asset utilization means that Capital Southwest is more efficient with each dollar of assets it utilizes for everyday operations.Macro event markers
Discounted Cash Flow Analysis
Capital Southwest's custom levered DCF lands near -217.57 per share compared with market pricing around 23.88, leaving the stock above the modeled value. The market is pricing the shares around 1,011.1% over the model estimate. The setup uses a WACC of 6.53% and a long-term growth rate of 2.0%, with next-period free cash flow around -546.08 Million. Terminal value still drives about 86.0% of enterprise value. while net debt stands around 912.84 Million. When the model-to-market gap is this wide, the result should be treated as a scenario rather than a price target. Terminal value accounts for 86.0% of the total, meaning the output hinges on assumptions about conditions well beyond the explicit forecast window.Model Value / Share
-217.57
Equity value per share from the current custom levered DCF summary row.
Market Price
23.88
Current market price used by the same scenario.
Model Premium
1,011.1%
Market price sits above the model output.
WACC / LT Growth
6.53% / 2.0%
Forecast horizon: 2021 to 2030Terminal value share of EV: 86.0%
Capital Market Price vs. Intrinsic Value
This chart compares observed market pricing with the model-derived equity value per share across forecast periods. It also illustrates the relative premium or discount, expressed as a percentage difference between market valuation and modeled intrinsic value.
Projected Revenue and Levered Free Cash Flow
Revenue and levered free cash flow projections are presented in billions, outlining the expected financial trajectory over the modeled horizon.
Key Model Assumptions
The inputs below reflect the core assumptions applied in the valuation model, including growth expectations, discount rates, and capital structure considerations.
| Input | Current Value |
|---|---|
| Weighted Average Cost of Capital | 6.53% |
| Long-Term Growth Rate | 2.0% |
| Cost of Equity | 7.56% |
| After-Tax Cost of Debt | 5.11% |
| Debt Weighting | 43.89% |
| Equity Weighting | 56.11% |
| Net Debt | 912.84 million |
| Enterprise Value | -10.22 billion |
| Present Terminal Value | -8.8 billion |
| Terminal Value Share of EV | 86.0% |
Forecast Detail and Valuation Progression
This table presents the underlying forecast data used in the valuation, including revenue, cash flow generation, discounting effects, and the resulting per-share value across each projected period.
| Year | Revenue | Revenue Growth | Free Cash Flow | PV of LFCF | Equity Value / Share |
|---|---|---|---|---|---|
| 2021 | 72.58 million | 0.00% | -184.67 million | 0 | -217.37 |
| 2022 | 102.93 million | 41.82% | -184.67 million | 0 | -217.41 |
| 2023 | 90.33 million | -12.24% | -227.38 million | 0 | -219.21 |
| 2024 | 152.15 million | 68.44% | -188.51 million | 0 | -215.96 |
| 2025 | 163.81 million | 7.67% | -218.92 million | 0 | -217.93 |
| 2026 | 207.09 million | 26.42% | -209.59 million | -196.75 million | -217.57 |
| 2027 | 261.81 million | 26.42% | -264.97 million | -233.5 million | -217.57 |
| 2028 | 330.99 million | 26.42% | -334.97 million | -277.11 million | -217.57 |
| 2029 | 418.44 million | 26.42% | -423.48 million | -328.87 million | -217.57 |
| 2030 | 528.99 million | 26.42% | -535.37 million | -390.29 million | -217.57 |
Profitability Analysis
Based on Capital Southwest's financial statements, Capital Southwest maintains a strong margin profile with a net profit margin of 47.0% and an operating margin of 87.0%, producing net income of 70.55 million. Return on equity is 5.5%. Profitability trends are stable, with recent metrics holding near prior-year levels.Net Income | First Reported 1995-12-31 | Previous Quarter 25.62 million | Current Value 32.9 million | Quarterly Volatility 27.32 million |
Macro event markers
For Capital Southwest, profitability analysis measures the relationship between revenue, cost structure, and bottom-line earnings. Net margin of 47.0% reflects solid earnings conversion and cost discipline relative to revenue. Margin trends and return metrics below indicate whether the earnings profile is strengthening or deteriorating. Capital Southwest reports return on equity of 5.5%, positive but not at levels that signal strong capital efficiency.
Earnings per Share Projection vs Actual
The spread between high and low EPS estimates for Capital Southwest captures the degree of analyst disagreement on near-term earnings. Capital Southwest next EPS is estimated at 0.58 (range 0.54 to 0.60), with trailing EPS at 1.81. Tracking Capital Southwest's EPS alongside debt service and capital expenditure reveals underlying earnings durability. Analyst EPS projections for Capital Southwest set the bar that actual results are measured against. The direction and magnitude of any miss or beat often matters more than the absolute number. Capital Southwest reported estimated earnings of 0.576 in earnings per share on 30th of June 2026. Comparing this projection against historical actuals shows whether the consensus is trending toward or away from the company's recent earnings trajectory.Macro event markers
Earnings Estimation Breakdown
6 analysts contribute to the current consensus. The last reported EPS was 0.00 as of 31st of March 2026.
Last Reported EPS
0.54
Lowest
0.58
Expected EPS
0.60
Highest
Analyst estimate range around the current expected EPS projection.
Earnings Projection Consensus
| Number of Analysts | Historical Accuracy | Last Reported EPS | Estimated EPS for 30th of June 2026 | Current EPS (TTM) | |
| 6 | 91.79% | 0.00 | 0.58 | 1.81 |
Ownership Allocation
Ownership of Capital Southwest is predominantly retail, with 2.75% held by insiders and 29.59% by institutional investors.Revenue and Profit Overview
CSWC reported previous year's revenue of $163.81 million. Net Income was $70.55 million with profit before overhead, payroll, taxes, and interest of $226.74 million.Historical Cash Distributions
this Stock dividend behavior can provide additional context when investors evaluate valuation and capital return policy. Investors frequently compare payout ratios with earnings growth in the context of analysis of dividend stability. Income-focused investors may want to review this Stock dividend history.
What This Indicates
A P/E of 21.8 reflects a balance between current earnings quality and moderate forward expectations shaped by its transaction-driven, asset-light revenue model. For financial infrastructure platforms, the earnings multiple reflects operating economics and cost structure more than top-line growth alone. Capital Southwest retains 47.0% of revenue as profit, a level that provides meaningful downside protection relative to most peers in Capital Markets. This margin profile is a direct function of the underlying business economics. Capital Southwest's 1.28 debt-to-equity ratio falls within a manageable range, though shifts in interest rates or operating cash flow could pressure that balance. Capital Southwest earns 5.5% on equity - positive but moderate, indicating productive capital deployment without the kind of returns that signal strong competitive advantages. Capital Southwest behaves differently from pure growth names - its income characteristics and stable margin profile historically reduce portfolio-level volatility. Current pricing embeds an expectation of steady earnings performance roughly in line with historical trends. A shift in transaction growth, fee economics, and the durability of asset-light financial margins would alter the balance between what the market has priced in and what ultimately materializes.
Big Picture Assessment
Capital Southwest fits the profile of a high-margin business where returns flow from the underlying operating model and scale advantages, not financial leverage and defensive income characteristics, a positioning that shapes how financial infrastructure platforms are valued. Operating margins and return on equity remain in constructive territory, consistent with a company that covers its cost of capital and generates positive shareholder returns. The disconnect between healthy margins and below-average return on equity points to an overcapitalized balance sheet or recent investment that has not yet converted into proportional shareholder returns. On balance, Capital Southwest is a fundamentally strong business whose premium valuation is backed by the underlying economics. Whether that premium expands depends on transaction growth, fee economics, and the durability of asset-light financial margins.
These valuation inputs for Capital Southwest should be revisited as new data and market conditions evolve. Given the current mix of multiples, margins, and leverage, the valuation picture is most useful when tracked over time rather than read as a static conclusion.
Valuation Framework, Methodology & Assumptions
Capital Southwest is a small-cap equity in Asset Management & Custody Banks, Financial Services, Nasdaq Real Estate categories. Earnings quality influences long-term valuation stability. Capital Southwest currently trades at P/E of 21.8, P/B of 1.44, P/S of 6.34.
Reported values for Capital Southwest are derived from periodic company reporting and market reference feeds and standardized for analysis. Professional analyst research is incorporated when coverage is available. Valuation outputs are model-derived and depend on published assumptions and reference inputs.
The analysis above is generated by quantitative models and is provided for informational and educational purposes only. It does not constitute financial advice, investment recommendations, or an endorsement to buy or sell any security. All investing involves risk, including the possible loss of principal. Consult a qualified financial advisor before making investment decisions. See our Terms of Use for full details.
Financial data referenced in this analysis is derived from publicly available SEC filings, audited financial statements, and third-party market data providers. The intrinsic value estimate is generated by Macroaxis quantitative models that incorporate fundamental analysis, technical indicators, and risk metrics.
The methodology combines multiple analytical inputs:
- Fundamental analysis - financial statements, profitability ratios, debt structure, and cash flow metrics sourced from SEC filings and public financial reports
- Technical indicators - historical price patterns, momentum signals, and volatility measures
- Risk assessment - probability of bankruptcy models, market risk metrics, and downside scenario analysis
- Peer comparison - relative valuation against industry peers using standardized multiples
Model outputs are refreshed periodically as new financial data becomes available. Past model performance is not indicative of future results. The intrinsic value estimate reflects a point-in-time calculation and should be considered alongside other research and professional advice.
Data sourced from SEC filings (EDGAR), public financial statements, and market data providers.
Editorial review and methodology oversight provided by: Vlad Skutelnik, Macroaxis Contributor
Growth Indicators
When investors treat Capital Southwest as a growth opportunity, they are usually paying for future execution rather than only for current fundamentals. The practical risk is that high expectations leave less room for disappointment when results or guidance soften.
| Common Stock Shares Outstanding | 51.19 million | |
| Quarterly Earnings Growth Y O Y | 28.70% | |
| Forward Price Earnings | 11.0011 |
Capital Southwest Current Valuation Indicators
Evaluating Capital Southwest's value means testing whether the share price matches the economics of the actual business. Earnings multiples, cash-flow yields, and asset-based measures work best as a group rather than in isolation. Reported values are derived from company filings, audited financial statements, and market data, and are standardized within Macroaxis quantitative models for consistency. Model outputs reflect a point-in-time estimate based on available data and assumptions and should be interpreted alongside changes in operating performance, market conditions, and forward expectations.