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CSW Industrials (CSWI)
NASDAQ:CSWI
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CSW Industrials
(NASDAQ:CSWI)
71Outperform
Positive Factors
Growth Potential
CSWI benefits from replacement cycles and break/fix opportunities, as its products are typically installed across the life cycle of larger, complementary OEM equipment.
Positive Industry Trends
Positive secular trends in HVAC, which represent over half of CSWI’s revenue, support an ongoing growth runway for CSWI.
Negative Factors
Integration Challenges
The current premium could be at risk if the company faces integration challenges from its acquisitions, sector-specific downturns or slower-than-expected growth.
Valuation Concerns
The stock is up 98% YTD and trading at 26.5x forward EBITDA forecast, indicating much of this growth is already reflected in the valuation.
CSW Industrials (CSWI) vs. S&P 500 (SPY)
Market Cap
$4.97B
Dividend Yield0.3%
Average Volume (3M)136.15K
Price to Earnings (P/E)35.8
Beta (1Y)1.40
Revenue Growth10.41%
EPS Growth34.56%
CountryUS
Employees2,600
SectorIndustrials
Sector Strength67
IndustryIndustrial Goods
Share Statistics
EPS (TTM)8.37
Shares Outstanding16,783,080
10 Day Avg. Volume165,217
30 Day Avg. Volume136,153
Financial Highlights & Ratios
PEG Ratio1.04
Price to Book (P/B)N/A
Price to Sales (P/S)5.72
Price to Cash Flow (P/CF)105.90
P/FCF Ratio145.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$384.67Price Target Upside29.92% Upside
Rating ConsensusHold
Number of Analyst Covering4
CSW Industrials Business Overview & Revenue Model
Company DescriptionCSW Industrials, Inc. operates as a diversified industrial company in the United States and internationally. It operates through three segments: Contractor Solutions, Engineered Building Solutions, and Specialized Reliability Solutions. The Contractor Solutions segment provides cements, diffusers, grilles, registers, solvents, thread sealants, traps, and vents for use in HVAC/R, plumbing, general industrial, architecturally, and specified building products. The Engineered Building Solutions segment offers architectural railings and associated services; fire and smoke protection solutions; and pre-engineered and custom architectural building components for use in architecturally specified building products. The Specialized Reliability Solutions segment provides compounds, lubricants, lubricant management products, and sealants; and contamination control, industrial maintenance and repair, and operations solutions for use in energy, general industrial, mining, and railing markets. The company was incorporated in 2014 and is headquartered in Dallas, Texas.
How the Company Makes MoneyCSW Industrials generates revenue through the sale of its diverse range of industrial products and specialty chemicals. The company earns money primarily by manufacturing and selling products that cater to specific niche markets. Key revenue streams include the Industrial Products segment, which offers products such as fire and smoke protection systems, architecturally-specified building products, and industrial systems that serve HVAC/R and plumbing markets. The Specialty Chemicals segment contributes by providing coatings, sealants, and lubricants that serve the energy, rail, and mining industries. CSWI's earnings are driven by its ability to develop innovative solutions that meet the stringent requirements of its varied customer base across different sectors. Strategic partnerships with distributors and direct sales to end-users also play a significant role in the company's revenue generation.
CSW Industrials Financial Statement Overview
Summary
CSW Industrials demonstrates a solid financial position with strong revenue growth, robust profitability margins, and a debt-free balance sheet. The income statement shows consistent revenue growth and solid margins. However, the return on equity is moderate, and cash flow management requires attention to capital expenditures.Income Statement
CSW Industrials shows strong financial performance in its income statement with consistent revenue growth. The revenue increased from $792.84 million to $858.61 million in TTM, reflecting a healthy revenue growth rate. The company maintains robust profitability margins, with a gross profit margin of approximately 44.8% and a net profit margin of 15.5% in TTM. EBIT and EBITDA margins also remain solid, indicating efficient operations and cost management.85
Very Positive
Balance Sheet
The balance sheet of CSW Industrials is marked by a strong equity position and zero total debt in the latest period, which eliminates leverage risks. The equity ratio is high at 77.3%, reflecting financial stability and resilience. However, the return on equity (ROE) is relatively moderate at about 12.8% in TTM, suggesting room for improvement in generating returns on shareholders' equity.78
Positive
Cash Flow
CSW Industrials exhibits a strong cash flow position with significant free cash flow generation of $146.85 million in TTM. The operating cash flow to net income ratio is robust, indicating good cash conversion efficiency. Free cash flow growth remains stable, although the company should continue to monitor capital expenditures to maintain free cash flow levels.82
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 858.61M | 792.84M | 757.90M | 626.43M | 419.20M | 385.87M | Gross Profit |
| 385.07M | 350.75M | 318.21M | 255.96M | 184.80M | 177.05M | EBIT |
| 181.24M | 159.12M | 139.07M | 97.38M | 59.47M | 66.07M | EBITDA |
| 211.11M | 192.03M | 174.73M | 133.06M | 76.29M | 73.48M | Net Income Common Stockholders |
| 133.35M | 101.65M | 96.44M | 66.39M | 40.10M | 45.72M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 213.75M | 22.16M | 18.45M | 16.62M | 10.09M | 18.34M | Total Assets |
| 1.35B | 1.04B | 1.04B | 995.36M | 874.96M | 369.25M | Total Debt |
| 0.00 | 215.37M | 253.00M | 252.78M | 242.34M | 29.13M | Net Debt |
| -213.75M | 193.21M | 234.54M | 236.16M | 232.25M | 10.79M | Total Liabilities |
| 285.98M | 408.25M | 499.31M | 510.95M | 462.94M | 92.50M | Stockholders Equity |
| 1.04B | 615.72M | 525.67M | 469.09M | 412.01M | 276.74M |
| Cash Flow | Free Cash Flow | ||||
| 146.84M | 147.76M | 107.50M | 53.44M | 57.42M | 58.46M | Operating Cash Flow |
| 163.49M | 164.33M | 121.45M | 69.09M | 66.25M | 69.90M | Investing Cash Flow |
| -128.90M | -45.45M | -72.17M | -51.46M | -289.89M | -20.44M | Financing Cash Flow |
| 155.34M | -114.07M | -46.84M | -13.04M | 214.05M | -57.15M |
CSW Industrials Technical Analysis
Neutral
296.08
Price Trends
321.59
Negative
355.25
Negative
336.74
Negative
Market Momentum
-5.60
Negative
46.97
Neutral
80.87
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSWI, the sentiment is Neutral. The current price of 296.08 is below the 20-day moving average (MA) of 296.65, below the 50-day MA of 321.59, and below the 200-day MA of 336.74, indicating a neutral trend. The MACD of -5.60 indicates Negative momentum. The RSI at 46.97 is Neutral, neither overbought nor oversold. The STOCH value of 80.87 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CSWI.
CSW Industrials Risk Analysis
CSW Industrials disclosed 30 risk factors in its most recent earnings report. CSW Industrials 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
CSW Industrials Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $8.94B | 24.03 | 22.70% | 0.67% | 0.37% | 3.52% | |
73 Outperform | $11.72B | 26.22 | 16.15% | 1.41% | 0.78% | -8.42% | |
72 Outperform | $6.00B | 21.18 | 27.01% | 1.34% | 1.15% | 388.76% | |
71 Outperform | $4.97B | 35.81 | 16.33% | 0.30% | 10.41% | 34.56% | |
64 Neutral | $5.35B | 195.51 | 2.47% | ― | 1.31% | -89.60% | |
63 Neutral | $9.60B | 18.56 | 28.63% | 1.96% | -0.90% | -1.69% | |
62 Neutral | $8.27B | 14.02 | 2.58% | 3.08% | 3.83% | -15.91% |
* Industrials Sector Average
Performance Comparison
CSWI
CSW Industrials
296.08
62.18
26.58%
AIT
Applied Industrial Technologies
232.22
36.02
18.36%
WSC
WillScot Mobile Mini Holdings
29.31
-17.08
-36.82%
MSA
MSA Safety
151.90
-39.45
-20.62%
NDSN
Nordson
206.55
-64.44
-23.78%
AOS
A. O. Smith Corporation
66.90
-21.04
-23.93%
CSW Industrials Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -14.21% | Next Earnings Date: May 21, 2025
Earnings Call Sentiment Neutral
CSW Industrials showcased strong overall performance with record revenue and strategic acquisitions, leading to improved EBITDA margins and a robust balance sheet. However, challenges were noted in gross profit margins, cash flow, and specific market segments, balancing the sentiment.Highlights
Record Revenue and Growth
CSW Industrials reported fiscal third quarter 2025 revenue of $194 million, a record for the company, marking an 11% increase compared to the prior year period. Adjusted EBITDA also reached a record $42 million, with a 14% growth over the prior year.
Successful Acquisition Strategy
Acquisition of PF WaterWorks was completed, expanding product offerings in eco-friendly drain management solutions. Acquisitions contributed $15 million to revenue growth in the quarter.
Improved EBITDA Margins
Adjusted EBITDA margin improved by 70 basis points to 21.7% compared to 21% in the prior year quarter.
Strong Balance Sheet and Cash Position
CSW Industrials ended the fiscal third quarter with $214 million in cash, maintaining a strong balance sheet after repaying all borrowings.
Recognition and Awards
RectorSeal team was awarded the 2024 Voice of the Distributor Award from HARDI, recognizing the Supplier of the Year.
Lowlights
Decline in Gross Profit Margin
Gross profit margin declined by 90 basis points to 41.4% due to increased freight expenses.
Decreased Cash Flow from Operations
Cash flow from operations decreased to $12 million from $47 million in the same quarter last year due to a $17 million tax payment deferral and increased inventory.
Organic Growth Challenges
Organic growth was limited to 1.2% within the Contractor Solutions segment, impacted by true-ups on rebates and OEM inventory holding patterns.
Headwinds in Architecturally Specified Building Products
The architecturally specified building products end market within Contractor Solutions experienced a decline.
Company Guidance
During the CSW Industrials' fiscal third quarter 2025 earnings call, the company reported record results across several key metrics. Revenue reached $194 million, marking an 11% increase compared to the prior year, with $15 million of this growth attributable to recent acquisitions. Adjusted EBITDA rose to $42 million, showing a 14% growth and representing a 21.7% margin, which expanded by 70 basis points. Additionally, the adjusted earnings per diluted share was $1.48, a 49% increase from the previous year. The company also highlighted a strategic acquisition of PF WaterWorks for $42 million, aimed at expanding their eco-friendly product offerings in the Contractor Solutions segment. Looking ahead, CSWI anticipates an active M&A landscape in 2025 and remains committed to leveraging their strong balance sheet and disciplined capital allocation strategy to enhance shareholder value.CSW Industrials Corporate Events
M&A TransactionsBusiness Operations and Strategy
CSW Industrials Expands with Aspen Manufacturing Acquisition
Positive
Mar 18, 2025
On March 17, 2025, CSW Industrials, through its subsidiary RectorSeal, entered into a definitive agreement to acquire Aspen Manufacturing for $313.5 million. This acquisition is expected to expand CSWI’s HVAC/R product portfolio and enhance its market position by adding Aspen’s evaporative coils and air handler offerings. The transaction aligns with CSWI’s strategic expansion goals and is anticipated to be immediately accretive to its earnings per share and EBITDA, while maintaining a strong balance sheet.
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.