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Core & Main (CNM)
NYSE:CNM
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Core & Main
(NYSE:CNM)
74Outperform
Positive Factors
Financial Performance
Net sales and margins beat Wells/Street estimates; total sales growth (+11.5%) compares to +9% estimates into EPS & implies slightly positive organic sales.
Market Position
CNM is a leading waterworks distributor in a highly fragmented market, which favors long-term consolidation.
Shareholder Returns
The company has demonstrated commitment to shareholder returns with a $100 million share repurchase in Q3.
Negative Factors
End Market Challenges
Fire protection end market volumes were negative with continued price pressure.
Market Valuation
Shares at ~17.5x P/E (-20% vs May) more than embed the risk & overshadow a still high quality business.
Core & Main (CNM) vs. S&P 500 (SPY)
Market Cap
$9.84B
Dividend YieldN/A
Average Volume (3M)1.93M
Price to Earnings (P/E)23.3
Beta (1Y)1.75
Revenue Growth8.24%
EPS Growth1.25%
CountryUS
Employees5,000
SectorIndustrials
Sector Strength70
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)2.12
Shares Outstanding190,189,440
10 Day Avg. Volume2,404,591
30 Day Avg. Volume1,933,551
Financial Highlights & Ratios
PEG Ratio18.65
Price to Book (P/B)N/A
Price to Sales (P/S)1.34
Price to Cash Flow (P/CF)N/A
P/FCF Ratio93.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$58.40Price Target Upside17.93% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
Core & Main Business Overview & Revenue Model
Company DescriptionCore & Main, Inc. distributes water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies, and professional contractors in the municipal, non-residential, and residential end markets in the United States. Its products include pipes, valves, hydrants, fittings, and other products and services; storm drainage products, such as corrugated piping systems, retention basins, inline drains, manholes, grates, geosynthetics, and other related products; fire protection products, including fire protection pipes, sprinkler heads and other devices, fire suppression systems, and related accessories, as well as fabrication services; and meter products, such as smart meter products, installation, software and other services. The company's specialty products and services are used in the maintenance, repair, replacement, and construction of water and fire protection infrastructure. Core & Main, Inc. was founded in 1874 and is headquartered in St. Louis, Missouri.
How the Company Makes MoneyCore & Main generates revenue primarily through the sale and distribution of water, wastewater, storm drainage, and fire protection products. The company's key revenue streams include direct sales to municipal water utilities, private water companies, and professional contractors engaged in construction and maintenance of water and wastewater infrastructure. Core & Main benefits from its extensive network of distribution centers and a diverse supplier base, enabling it to offer a broad product portfolio and maintain strong relationships with manufacturers. Additionally, the company leverages its technical expertise and service capabilities to provide value-added solutions, such as product training and design support, further enhancing its revenue potential. Significant partnerships with manufacturers and its strategic presence in key geographic markets also contribute to Core & Main's financial performance.
Core & Main Financial Statement Overview
Summary
Core & Main exhibits strong financial health with robust revenue growth, profitability, and cash flow generation. The company demonstrates consistent revenue growth, effective cost management, and solid profitability metrics. The balance sheet shows moderate leverage, while cash flow generation remains strong, indicating excellent operational efficiency and cash conversion capabilities. Monitoring debt levels is advised to maintain financial stability.Income Statement
Core & Main demonstrates a robust financial performance with consistent revenue growth and strong profitability. The TTM Gross Profit Margin stands at 25.5%, reflecting efficiency in cost management. The Net Profit Margin is at 5.7% for the TTM, indicating solid profitability. Revenue growth from the previous year is notable at 7.18%, showcasing a positive trend. The EBIT and EBITDA margins are healthy at 9.95% and 12.39% respectively, highlighting operational efficiency.85
Very Positive
Balance Sheet
The balance sheet shows moderate leverage with a Debt-to-Equity Ratio of 1.57 for the TTM, indicating reliance on debt financing but within manageable limits. The Equity Ratio is 26.88%, suggesting a balanced capital structure. Return on Equity is strong at 24.54%, reflecting effective use of equity to generate profits. However, the company should monitor its debt levels closely to maintain financial stability.70
Positive
Cash Flow
Cash flow analysis reveals strong performance with a Free Cash Flow of $651 million in the TTM, demonstrating robust cash generation. The Operating Cash Flow to Net Income Ratio is 1.66, indicating excellent cash conversion efficiency. The Free Cash Flow to Net Income Ratio is also healthy at 1.59. Despite a decrease in Operating Cash Flow from the previous year, the company's ability to generate cash remains strong.80
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 7.18B | 6.70B | 6.65B | 5.00B | 3.64B | 3.39B | Gross Profit |
| 1.83B | 1.82B | 1.79B | 1.28B | 878.40M | 789.00M | EBIT |
| 715.00M | 740.00M | 775.00M | 425.00M | 185.50M | 155.00M | EBITDA |
| 890.00M | 894.00M | 924.00M | 511.00M | 319.00M | 293.00M | Net Income Common Stockholders |
| 410.00M | 371.00M | 581.00M | 225.00M | 37.00M | 36.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.00M | 1.00M | 177.00M | 1.00M | 380.90M | 180.90M | Total Assets |
| 4.43B | 5.07B | 4.91B | 4.43B | 3.59B | 3.20B | Total Debt |
| 1.62B | 2.07B | 1.63B | 1.62B | 2.39B | 2.15B | Net Debt |
| 1.62B | 2.07B | 1.46B | 1.62B | 2.01B | 1.97B | Total Liabilities |
| 2.60B | 3.54B | 2.50B | 2.60B | 2.92B | 2.56B | Stockholders Equity |
| 1.32B | 1.45B | 1.75B | 1.32B | 673.90M | 641.50M |
| Cash Flow | Free Cash Flow | ||||
| 651.00M | 1.03B | 376.00M | -51.00M | 207.90M | 180.00M | Operating Cash Flow |
| 680.00M | 1.07B | 401.00M | -31.00M | 219.80M | 194.00M | Investing Cash Flow |
| -845.00M | -270.00M | -152.00M | -203.00M | -228.90M | -234.00M | Financing Cash Flow |
| 74.00M | -975.00M | -73.00M | -146.00M | 209.10M | 184.00M |
Core & Main Technical Analysis
Positive
49.52
Price Trends
52.12
Negative
50.37
Negative
48.94
Positive
Market Momentum
-0.80
Negative
50.15
Neutral
77.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNM, the sentiment is Positive. The current price of 49.52 is above the 20-day moving average (MA) of 48.40, below the 50-day MA of 52.12, and above the 200-day MA of 48.94, indicating a neutral trend. The MACD of -0.80 indicates Negative momentum. The RSI at 50.15 is Neutral, neither overbought nor oversold. The STOCH value of 77.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CNM.
Core & Main Risk Analysis
Core & Main disclosed 50 risk factors in its most recent earnings report. Core & Main 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 0 New Risks
Core & Main Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $20.07B | 37.37 | 20.39% | 2.11% | 4.59% | -2.05% | |
77 Outperform | $44.12B | 37.30 | 33.04% | 2.08% | 2.71% | -0.63% | |
74 Outperform | $9.84B | 23.32 | 23.84% | ― | 8.24% | 1.25% | |
65 Neutral | $2.89B | 20.89 | 10.37% | ― | 3.71% | -49.38% | |
64 Neutral | $743.72M | 37.86 | -1.00% | 3.20% | -9.98% | -106.51% | |
63 Neutral | $12.25B | 28.84 | 33.41% | 1.44% | -4.16% | -15.44% | |
62 Neutral | $8.36B | 14.28 | 2.39% | 3.06% | 3.99% | -14.45% |
* Industrials Sector Average
Performance Comparison
CNM
Core & Main
49.52
-7.25
-12.77%
FAST
Fastenal Company
77.09
1.52
2.01%
POOL
Pool
325.63
-83.41
-20.39%
WSO
Watsco
517.94
93.51
22.03%
RYI
Ryerson Holdings
23.35
-8.46
-26.60%
GMS
GMS
75.39
-21.46
-22.16%
Core & Main Earnings Call Summary
Earnings Call Date: Mar 25, 2025 | % Change Since: -0.24% | Next Earnings Date: Jun 10, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. Core & Main highlighted strong sales, successful acquisitions, and robust cash flow generation, indicating positive business momentum. However, challenges such as declining gross margins, decreased net income, and increased expenses due to cost inflation and interest rates were also noted. The company is focused on capital deployment and acquisition strategies to drive future growth.Highlights
Strong Sales and Demand Resilience
Core & Main reported net sales of over $1.8 billion for the third quarter, slightly above the previous year. Sales were up 30% from the third quarter of fiscal 2021, driven by resilient demand and growth initiatives.
Successful Acquisitions and Market Expansion
The company announced three new acquisitions after the quarter, with combined annualized net sales of over $330 million. These acquisitions enhance product offerings and market presence.
High Operating Cash Flow Generation
Core & Main generated $373 million in operating cash flow in the third quarter, with over 140% conversion from adjusted EBITDA.
Positive Capital Deployment Strategy
The company executed share repurchases, deploying nearly $770 million of capital to retire 30 million shares this year, enhancing shareholder value.
Robust M&A Pipeline
The M&A pipeline remains strong, with expectations of continued growth through acquisitions, targeting 2% to 4% annual net sales growth from M&A.
Lowlights
Gross Margin Decline
Gross margin for the third quarter was 27%, 50 basis points lower than the prior year, due to inventory costs catching up with market prices.
Decreased Net Income
Net income for the third quarter was $158 million, a decrease compared to $178 million in the prior year, mainly due to lower operating income.
Cost Inflation Impact on SG&A
SG&A expenses increased by 4% to $240 million in the third quarter, impacted by acquisitions and cost inflation.
Interest Expense Increase
Interest expense rose to $20 million for the third quarter, up from $16 million in the prior year, due to higher variable rates on the senior term loan.
Company Guidance
In the Core & Main Q3 2023 Earnings Call, the company provided detailed guidance for the current fiscal year and a preliminary outlook for 2024. The management expects fiscal 2023 net sales to be between $6.65 billion and $6.75 billion, with an adjusted EBITDA range of $890 million to $910 million due to strong margin performance and disciplined inventory optimization. For fiscal 2024, market volume growth is anticipated to be flat to up low single digits, driven by stable municipal budgets and potential federal infrastructure funding, with pricing expected to remain neutral. The company noted year-to-date net sales of just over $1.8 billion and an adjusted EBITDA margin of 14.2% in Q3. Gross margin was reported at 27%, 50 basis points lower than the previous year, due to inventory costs aligning with market prices, although gross margin initiatives and M&A synergies have offset some of these impacts. The company has also highlighted its strategic focus on organic growth, M&A, and capital returns, deploying $770 million for share repurchases in 2023 and maintaining a robust acquisition pipeline with eight acquisitions contributing over $330 million in annualized net sales.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.