Capital Southwest inventory downgraded on valuation considerations

May 16, 2024 | blog

On Thursday, Capital Southwest Corp (NASDAQ:) obtained a downgrade to Market Perform from Market Outperform by JMP Securities, following the corporate’s current earnings report. The funding agency cited valuation considerations, suggesting that the inventory was priced to perfection after Capital Southwest disclosed its quarterly outcomes on Wednesday.

The firm reported a robust quarter, with web funding revenue (NII) per share at $0.67, which was a penny greater than each JMP Securities’ estimate and the consensus of $0.66. Capital Southwest’s funding revenue reached $46.4 million, aligning carefully with the anticipated $46.6 million. Total bills got here in at $16.7 million, which was $0.6 million decrease than anticipated, contributing to a pretax NII that exceeded forecasts by $0.4 million ($29.8 million versus the estimated $29.3 million).

Despite the strong NII exceeding dividend funds, the corporate’s web asset worth (NAV) remained unchanged quarter over quarter at $16.77. This was attributed to a steadiness of robust NII and a $0.36 per share in web unrealized and realized losses. Additionally, Capital Southwest’s funding portfolio confirmed an 8% sequential enhance, rising to $1.48 billion.

InvestingPro Insights

Capital Southwest Corp (NASDAQ:CSWC) has lately displayed a notable monetary efficiency, and insights from InvestingPro can present a deeper understanding of the corporate’s present market place. According to InvestingPro knowledge, CSWC boasts a market capitalization of roughly $1.13 billion, a P/E ratio of 13.28, and a outstanding income development of 63.76% within the final twelve months as of Q3 2024. This means that the corporate’s development trajectory is strong, which can curiosity traders in search of increasing operations.

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InvestingPro Tips spotlight a number of key points of CSWC that would affect investor selections. The firm pays a major dividend with a yield of 9.36%, offering a gorgeous return for income-focused traders. Additionally, CSWC has maintained dividend funds for a powerful 42 consecutive years, demonstrating a dedication to shareholder returns. On the expansion entrance, the inventory has skilled a big value uptick during the last six months, with a complete value return of 26.54% throughout that interval. This may point out a robust market confidence within the firm’s future prospects.

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