Capital Southwest Corporation (CSWC) AI Stock Analysis

Capital Southwest Corporation, based in Dallas, Texas, operates as a business development company specializing in credit, private equity, and venture capital investments primarily in middle market companies. Founded in 1961, the firm targets mature and growth-oriented companies in industries including industrial manufacturing, healthcare products and services, specialty chemicals, and technology-enabled services such as SaaS models. Financing structures include unitranche debt, subordinated debt, senior debt, first and second lien debt, as well as preferred and common equity. Investment sizes range from $5 million to $50 million for equity and $5 million to $20 million for debt, with capacity for transactions up to $40 million.

Between FY2021 and FY2026, Capital Southwest generated a 5-year revenue compound annual growth rate of 27.6%. Revenue rose from $102.9M in FY2022 to $163.8M in FY2025, before growing 50.1% to $245.9M in FY2026. Net income reached $113.0M in FY2026 with an operating margin of 76.9% and a net margin of 45.9%, yielding an EPS of $2.37. Over the trailing twelve months, revenue was $237.2M with a profit margin of 46.7%. In the latest quarter ended June 30, 2026, quarterly revenue grew 9.1% year-over-year, while quarterly earnings declined 17.8%.

As of June 30, 2026, Capital Southwest held $58.5M in cash and short-term investments alongside total debt of $483.9M, resulting in net debt of $425.4M. Shareholders' equity was $1.06B against total assets of $2.32B, reflecting a debt-to-equity ratio of 0.46 and a current ratio of 0.26. In FY2026, operating cash flow was -$193.5M and free cash flow was -$193.5M, while capital expenditures were $286,000. Cash usage included $147.2M in dividends paid, while share count expanded 200.9% over five years.

At a last close of $23.08, Capital Southwest carries a market capitalization of $1.47B and an enterprise value of $2.64B. The stock trades at a trailing P/E of 12.8x and a forward P/E of 11.4x, slightly above the median of its US-listed Financial Services peers at 12.1x trailing and 10.8x forward. Its price-to-sales ratio of 6.2x is higher than the peer median of 3.2x, while its price-to-book ratio is 1.4x. Over the trailing 1-year period, CSWC returned 26.8%, outperforming the S&P 500 (SPY) return of 16.8%, but its 5-year return of 50.2% trailed SPY's 83.0%.

Capital Southwest offers an annualized forward dividend of $3.04, representing a dividend yield of 13.17% with a payout ratio of 35.3%. The company has paid consecutive dividends for 42 years, delivering a 5-year annualized dividend growth rate of 4.6%. Its last ex-dividend date was December 15, 2026.

Wall Street coverage consists of 3 Strong Buy, 1 Buy, and 3 Hold ratings, with zero Sell ratings. The mean price target of $25.08 represents an upside of 8.7% compared to the last close of $23.08. For the current fiscal year ending March 31, 2027, consensus estimates project revenue of $266.6M and an EPS of $2.24. Over the last four quarters, the company beat EPS estimates twice. The next earnings release is scheduled for November 2, 2026.

This page is an AI-written research summary of Capital Southwest Corporation (CSWC). The text was generated on October 30, 2026 from Quotelinks data as of October 16, 2026 (company profile, annual results, latest balance sheet, valuation, price performance and analyst estimates). An automatic check rejects any draft that contains a figure not found in that data. It is not investment advice; verify figures on the linked tabs before making decisions.

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