5 Reasons to Add Capital Southwest (CSWC) to Your Portfolio Now
It seems to be a wise idea to add Capital Southwest Corporation CSWC stock to your portfolio now. Supported by strong fundamentals, the company remains on track for growth.
Analysts are optimistic regarding the company’s earnings growth potential. The Zacks Consensus Estimate for CSWC’s current fiscal year earnings has been revised 2% upward over the past 60 days.
CSWC currently carries a Zacks Rank #2 (Buy).
Shares of Capital Southwest have gained 13.1% over the past six months compared with the industry’s 0.6% growth.
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Mentioned below are some other factors that make Capital Southwest stock a solid pick right now.
Earnings per Share (EPS) Growth: In the last three to five years, CSWC witnessed EPS growth of 12.4%, higher than the industry average of 7.8%. The upward trend will likely continue in the near term. In fiscal 2024 and 2025, the company’s earnings are projected to grow 12.7% and 1.3%, respectively.
Revenue Strength: Capital Southwest’s total investment income witnessed a CAGR of 23.1% over the last five fiscal years (ended Mar 31, 2023). The company’s top line is expected to keep improving in the near term, as reflected by the projected sales growth rates of 39.2% and 11.7% for fiscal 2024 and 2025, respectively.
Impressive Capital Deployments: Capital Southwest continues to enhance shareholder value through efficient capital deployment activities. In April 2023, the company hiked its regular dividend by 1.9% from 53 cents per share to 54 cents. Also, it announced a supplemental distribution of 5 cents per share. CSWC also has an efficient share repurchase plan in place.
Superior Return on Equity (ROE): The company’s ROE of 13.21% is higher than the industry average of 12.69%. This shows that it reinvests its cash more efficiently than its peers.
Valuation Favorable: The CSWC stock looks undervalued right now with respect to its price-to-book (P/B) and price-to-earnings (P/E) ratios. It has a P/B ratio of 1.11, below the industry average of 1.36. Moreover, its P/E (F1) ratio of 7.37 compares favorably with the industry’s 11.00.
Other Stocks Worth A Look
A couple of other top-ranked stocks from the same space are Federated Hermes, Inc. FHI and Artisan Partners Asset Management Inc. APAM, each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings estimates for FHI have been revised 1.5% upward for 2023 over the past 60 days. The company’s share price has declined 12.5% over the past three months.
Artisan Partners’ earnings estimates have been revised upward by 3.4% for the current year over the past 60 days. In the last three months, APAM’s share price has risen by 22.3%.
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Artisan Partners Asset Management Inc. (APAM) : Free Stock Analysis Report
Capital Southwest Corporation (CSWC) : Free Stock Analysis Report
Federated Hermes, Inc. (FHI) : Free Stock Analysis Report
