Capital Southwest Corporation Common Stock (CSWC)

FairStock Score: 84/100 — HIGH CONVICTION

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

As a value investor, I see Capital Southwest as a niche business development company that lends to and invests in lower middle market private businesses. The operation is small—36 employees—and its edge comes from underwriting and relationships, not a wide moat; capital is plentiful, so I would not pay a premium for it. At the 2026-10-13 close of $23.50, FairStock calculates a P/E of 12.98, P/B of 1.41, and a 12.99% dividend yield. The Graham Number is $26.01, implying only a 9.65% margin of safety, so the price is fair rather than compelling. Earnings are improving off a soft patch: in fiscal year 2026 (ended 2026-03-31), net income was $113.0M and diluted EPS was $1.90, up from $70.5M and $1.47 in fiscal year 2025 (ended 2025-03-31), though fiscal year 2024 (ended 2024-03-31) had higher diluted EPS of $2.05. In fiscal Q1 2027 (quarter ended 2026-06-30), net income was $24.7M and diluted EPS was $0.39. Financial health gives me pause: D/E is 1.16, trailing free cash flow is -$305.0M, FCF yield is -20.4%, Altman Z-Score is 0.67, and Piotroski F-Score is 1/9. ROE is 11.21% and ROCE is 6.21%. FairStock labels it a STALWART on 17.3% five-year profit growth. A 12.99% yield may compensate for the leverage and weak balance-sheet scores, but with modest margin of safety and weak financial-health readings, I would want clearer dividend coverage and steadier cash generation before calling it a bargain.

In plain English: Capital Southwest is a business development company: it lends money to and invests in smaller private businesses. It earns a profit and pays a very high dividend, but it also uses a lot of borrowed money and has negative cash flow, so the balance sheet is not rock-solid. At $23.50 on October 13, 2026, the price looks roughly fair to slightly cheap compared with its profits and book value, not a screaming bargain.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q1 2027 10-Q (period ended 2026-06-30) · fiscal Q4 2026 10-K (period ended 2026-03-31) · fiscal Q3 2026 10-K (period ended 2025-12-31) · fiscal Q2 2026 10-K (period ended 2025-09-30) · FY2026 10-K (period ended 2026-03-31) · FY2025 10-K (period ended 2025-03-31) · FY2024 10-K (period ended 2024-03-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer