Capital Southwest Corporation
- Open
- 23.85
- Day high
- 24.07
- Day low
- 23.85
- Prev close
- 23.77
- Volume
- 475K
- Mkt cap
- $1.4B
- P/E (TTM)
- 11.9
- EPS (TTM)
- $2.01
- P/B
- 1.4
- P/S
- 6.5
- Yield
- 10.70%
- Per share
- $2.56
- ▲Insiders net buying $38K over the last 3 months (4 open-market buys, 1 sale)
- ◆Cluster buying — multiple insiders bought within days
- 🏛Institutions mixed (13F)
Capital Southwest Corporation (CSWC) is a Financial Services company listed on NASDAQ. The stock is up 8% over the past year. Over the trailing 3 months, insiders filed 4 open-market buys and 1 sale (SEC Form 4).
Capital Southwest Corporation (CSWC) financials & analyst ratings
Fundamentals (TTM)
Source: exchange market data + company filings. Figures are trailing-twelve-month or as most recently reported. For informational purposes only — not investment advice.
CSWC earnings date, history & EPS estimates
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| May 14, 2026 | $0.56 | $0.57 | +1.8% | $58M | -6.5% |
| Feb 2, 2026 | $0.64 | $0.64 | +0.0% | $62M | +0.2% |
| May 14, 2025 | $0.62 | $0.54 | -12.9% | $28M | -46.7% |
| Feb 3, 2025 | $0.62 | $0.63 | +1.6% | $27M | -49.5% |
| Jan 29, 2024 | $0.66 | $0.70 | +6.1% | $49M | +5.7% |
| May 22, 2023 | $0.62 | $0.65 | +4.8% | $25M | -32.1% |
| Jan 30, 2023 | $0.57 | $0.62 | +8.8% | $12M | -60.3% |
| May 23, 2022 | $0.48 | $0.50 | +4.2% | $25M | +16.0% |
| Jan 31, 2022 | $0.47 | $0.51 | +8.5% | $19M | -7.5% |
| Nov 1, 2021 | $0.44 | $0.43 | -2.3% | $19M | -9.2% |
| May 25, 2021 | $0.43 | $0.39 | -9.3% | $15M | -72.9% |
| Feb 1, 2021 | $0.41 | $0.45 | +9.8% | $22M | +30.2% |
CSWC insider trading activity (SEC Form 4)
| Date | Insider | Type | Shares | Price |
|---|---|---|---|---|
| Jun 30, 2026 | Rogers-Windsor Ramona Lynndirector | Buy | 211 | $23.70 |
| Jun 18, 2026 | BATTIST CHRISTINEdirector | Buy | 860 | $23.23 |
| Jun 10, 2026 | Rehberger Chrisofficer: Chief Financial Officer | Tax | 3,688 | $23.54 |
| Jun 10, 2026 | Sarner Michael Scottdirector, officer: President and CEO | Grant | 140,000 | — |
| Jun 10, 2026 | Weinstein Joshua S.officer: Senior Managing Director & CIO | Grant | 100,000 | — |
| Jun 10, 2026 | Weinstein Joshua S.officer: Senior Managing Director & CIO | Tax | 9,588 | $23.54 |
| Jun 10, 2026 | Weinstein Joshua S.officer: Senior Managing Director & CIO | Tax | 11,349 | $23.28 |
| Jun 10, 2026 | Sarner Michael Scottdirector, officer: President and CEO | Tax | 13,765 | $23.28 |
| Jun 10, 2026 | Rehberger Chrisofficer: Chief Financial Officer | Tax | 4,492 | $23.28 |
| Jun 10, 2026 | Rehberger Chrisofficer: Chief Financial Officer | Grant | 75,000 | — |
| Jun 10, 2026 | Sarner Michael Scottdirector, officer: President and CEO | Tax | 11,705 | $23.54 |
| Jun 5, 2026 | Thomas William R IIIdirector | Sell | 4,661 | $23.29 |
| Jun 5, 2026 | Thomas William R IIIdirector | Buy | 5,000 | $23.40 |
| Jun 1, 2026 | Rogers-Windsor Ramona Lynndirector | Buy | 213 | $23.42 |
| Mar 2, 2026 | Sarner Michael Scottdirector, officer: President and CEO | Buy | 2,695 | $21.90 |
Source: CSWC SEC Form 4 filings, latest Jun 30, 2026. For informational purposes only — not investment advice.
See the full CSWC insider & 13F page →Capital Southwest Corporation company profile
Overview
Capital Southwest Corporation (NASDAQ:CSWC) is a business development company founded in 1961 and based in Dallas, Texas. The company specializes in providing credit and private equity investments to middle-market companies, focusing primarily on first lien senior secured debt financing. Since going public in 1980, Capital Southwest has established itself as a prominent player in the lower middle market lending space, with a total investment portfolio that has grown to approximately $1.8 billion as of fiscal year 2025. The company operates as a regulated investment company under the Investment Company Act of 1940 and has elected to be treated as a business development company, allowing it to provide capital solutions to growing businesses while generating income for shareholders through regular and supplemental dividends.
Business
Capital Southwest operates in the business development company sector, which serves as a bridge between traditional bank lending and private equity investment. The company provides financing solutions to middle-market companies that are typically too large for traditional bank loans but too small to access public capital markets efficiently. The company's core business revolves around direct lending and private credit investments. Capital Southwest primarily originates and invests in first lien senior secured debt, which represents the most senior position in a company's capital structure and provides the highest level of security and priority in repayment. This debt typically carries floating interest rates tied to benchmark rates, providing natural protection against rising interest rate environments. Capital Southwest's investment portfolio can be broken down into several key components: 1. **Credit Portfolio (approximately 90% of total portfolio)**: This consists primarily of first lien senior secured debt investments ranging from $5 million to $25 million per transaction. The company targets companies with revenues approaching $10 million or more, profitable operations, and historical growth rates of at least 15% annually. The weighted average yield on the credit portfolio is approximately 11.7%, with an average leverage ratio of 3.5x EBITDA. 2. **Equity Co-Investment Portfolio (approximately 10% of total portfolio)**: Capital Southwest makes equity investments alongside its debt investments, typically representing up to 20% of the total investment amount. These equity positions, valued at approximately $179 million, are marked at 142% of cost, providing significant upside potential and portfolio appreciation. The company focuses on specific industry sectors including industrial manufacturing and services, value-added distribution, healthcare products and services, business services, specialty chemicals, food and beverage, and technology-enabled services. Within these sectors, Capital Southwest has developed particular expertise in energy services, industrial technologies, and specialty chemicals and products. Capital Southwest also operates under the Small Business Investment Company (SBIC) program, having received two SBIC licenses that allow the company to access low-cost government-backed financing. This provides additional leverage and enhances returns to shareholders while supporting small and medium-sized businesses.
Revenue model
Capital Southwest generates revenue through multiple streams within its lending and investment activities. The primary revenue source is interest income from its debt investments, which typically carry floating rates tied to SOFR (Secured Overnight Financing Rate) plus a spread. With a weighted average portfolio yield of 11.7%, the company benefits from both base rate movements and credit spreads. The company's fee income structure includes origination fees, amendment fees, and other transaction-related fees charged to portfolio companies. These fees typically range from 1-3% of the investment amount and provide immediate income upon closing transactions. Dividend income and capital appreciation from equity co-investments represent another significant revenue stream. The equity portfolio, marked at 142% of cost, generates returns through dividend distributions and capital gains upon exit events such as sales or IPOs of portfolio companies. Capital Southwest's customers are primarily private equity-backed middle-market companies, with 93% of the credit portfolio backed by private equity sponsors. These sponsors typically seek debt financing for leveraged buyouts, growth capital, acquisition financing, dividend recapitalizations, and refinancing transactions. Several factors influence the company's profitability and margins: **Positive margin drivers** include rising interest rates, which increase yields on floating-rate debt investments; strong deal flow in the lower middle market; disciplined underwriting standards that maintain low default rates; and the ability to access low-cost SBIC financing that enhances net interest margins. **Negative margin drivers** include credit losses from portfolio company defaults; competitive pressure from larger lenders and regional banks that can compress spreads; economic downturns that reduce deal flow and increase credit risk; and potential regulatory changes affecting business development companies or SBIC programs. The company's cost structure is primarily driven by interest expense on borrowed funds, management fees, and operational expenses. Capital Southwest maintains a conservative leverage approach with a debt-to-equity ratio of approximately 0.45x, providing flexibility to increase leverage opportunistically while maintaining financial stability.
Competitive moat
Capital Southwest's competitive moat is moderately strong but faces ongoing challenges from market dynamics and competition. The company's primary competitive advantages stem from its established market position, operational expertise, and access to favorable financing. The company's SBIC licenses provide a meaningful competitive advantage by offering access to government-backed, low-cost debt capital at rates of 4-5%, which is significantly below market rates for similar financing. With two SBIC licenses providing access to $175 million in additional debt capital, this creates a sustainable cost advantage that enhances returns and allows for more competitive pricing. Capital Southwest's specialized expertise in the lower middle market creates some defensive positioning. The company has developed deep knowledge in specific industry verticals and has built relationships with private equity sponsors over decades. This expertise allows for more effective due diligence, risk assessment, and portfolio management compared to generalist lenders. The company's conservative underwriting approach and focus on first lien senior secured debt provides defensive characteristics, with 95% of the portfolio rated in the top two credit categories. This risk management discipline helps maintain lower default rates and more predictable returns. However, Capital Southwest faces significant competitive pressures that limit the strength of its moat. Competition from larger business development companies, regional banks, and private credit funds has intensified, leading to spread compression and increased competition for high-quality deals. The lower middle market has become increasingly competitive as larger players move down-market. Regulatory and market risks also pose challenges. Changes to BDC regulations, SBIC program modifications, or shifts in interest rate policy could impact the company's business model. Additionally, the company's dependence on private equity sponsors creates concentration risk, as changes in the private equity market directly affect deal flow and opportunities. The scalability limitations of the lower middle market also constrain long-term growth potential. As Capital Southwest grows larger, it becomes increasingly difficult to deploy capital efficiently in smaller transactions, potentially forcing the company to compete in more competitive upper middle market segments.
Risks & safety
Capital Southwest presents a **moderate margin of safety** with some concerning liquidity metrics but strong underlying portfolio quality. **Liquidity and Solvency Concerns:** - Current ratio of 0.19x indicates potential short-term liquidity pressure - Cash and short-term investments of $43.2 million against current liabilities of $225.9 million - Debt-to-equity ratio of 0.45x remains conservative for a BDC - Access to $175 million in additional SBIC debt capital provides financing flexibility **Valuation Metrics:** - Price-to-book ratio of 1.20x suggests modest premium to net asset value - Price-to-earnings ratio of 4.06x appears attractive but reflects recent losses - Dividend yield of approximately 10.8% based on regular dividend of $2.32 per share **Portfolio Quality:** - 95% of credit portfolio rated in top two credit categories - Weighted average leverage of 3.5x EBITDA indicates conservative lending standards - 99% first lien senior secured debt provides strong downside protection - Equity portfolio marked at 142% of cost provides upside potential **Other Considerations:** - Regular dividend coverage maintained despite recent volatility - Strong sponsor backing (93% of portfolio) provides additional support - Conservative underwriting approach historically limits credit losses
Recent development
Over the past several years, Capital Southwest has executed a strategic transformation focused on scaling its direct lending platform and enhancing shareholder returns. The company has successfully grown its investment portfolio from $1.2 billion to $1.8 billion, representing a 21% compound annual growth rate while maintaining credit quality and conservative leverage. A key strategic initiative has been the company's expansion within the SBIC program. Capital Southwest received approval for its second SBIC license, providing access to an additional $175 million in low-cost government-backed financing. This expansion significantly enhances the company's cost of capital advantage and provides additional growth capacity at attractive spreads. The company has also focused on capital structure optimization, raising over $300 million in new debt capital including a $230 million convertible bond issuance at 5.125%. This financing diversification reduces dependence on any single funding source while maintaining competitive borrowing costs. Capital Southwest has demonstrated strong dividend growth discipline, increasing regular dividends for 29 consecutive quarters while maintaining coverage ratios above 100%. The company has also implemented a supplemental dividend policy, returning excess earnings to shareholders while building undistributed taxable income reserves. The company has enhanced its portfolio management capabilities by expanding its team from approximately 30 to 36 professionals and developing deeper sector expertise in industrial technologies, specialty chemicals, and energy services. This specialization allows for more effective origination, underwriting, and portfolio monitoring. Recent market positioning has involved adapting to increased competition and spread compression by maintaining disciplined underwriting standards while selectively competing for high-quality sponsor-backed opportunities. The company has also begun preparing for potential economic uncertainty by maintaining higher liquidity levels and focusing on defensive sectors.
CSWC company profile · for informational purposes only — not investment advice.
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