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On Friday, Citi analyst Andrew Kaplowitz adjusted the price target for CSW Industrials (NASDAQ:CSWI) shares, raising it to $321.00 from the previous $313.00, while keeping a Neutral rating on the stock. According to InvestingPro data, CSWI currently trades at a P/E ratio of 37.5x and an EV/EBITDA multiple of 21.9x, suggesting rich valuation levels. Kaplowitz’s remarks followed the company’s fourth-quarter earnings, highlighting a strong performance in the Contractor Solutions segment. However, he noted various challenges including tariff-related costs and pressures on margins that moderated the positive results.
CSW Industrials reported a robust fourth quarter of 2025, bolstered by its Contractor Solutions segment, with revenue growth of 10.4% over the last twelve months and a healthy gross margin of 44.9%. Despite this, the quarter was not without its difficulties. The company faced uncertainties related to tariff-related cost pressures, particularly from China and Vietnam, which are anticipated to impact margins. The adjustment of the EBITDA forecast for Contractor Solutions to the low-30% range, compared to 33.3% in the fiscal year 2025, reflects these challenges. InvestingPro analysis reveals the company maintains strong financial health with more cash than debt on its balance sheet.
The recent acquisition of Aspen by CSW Industrials has not yet contributed to margin growth for the consolidated business. However, management has indicated a clear trajectory toward margin accretion in the near term, which Kaplowitz views as a positive sign for the company’s future profitability. In response to the tariff-related headwinds, management has emphasized their commitment to maintaining margin dollars through strategic pricing actions, a move that Kaplowitz regards as a wise strategy.
CSW Industrials has established itself as a quality operator known for its ability to grow niche platforms and allocate capital effectively. Despite the current obstacles, Kaplowitz acknowledges the company’s disciplined approach to capital allocation and its reputation as a long-term compounder. The stock has experienced a significant decline of 8.8% over the past week, though InvestingPro analysis indicates the company maintains strong fundamentals with excellent cash flow coverage of interest payments. However, he believes that the current stock valuation already incorporates much of CSW Industrials’ long-term potential, aligning with InvestingPro’s Fair Value assessment which suggests the stock is currently overvalued.
In other recent news, CSW Industrials Inc . reported its fourth-quarter fiscal year 2025 earnings with an adjusted earnings per share (EPS) of $2.24, aligning with analyst expectations. The company achieved a revenue of $231 million, slightly under the forecast of $233.24 million, marking a 9% year-over-year increase. The acquisition of Aspen Manufacturing is expected to contribute to future revenue growth, with the company projecting high single to low double-digit revenue growth from this acquisition. Analysts noted that CSW Industrials anticipates mid to high single-digit growth in its Contractor Solutions segment. The company continues to focus on strategic initiatives to expand its product offerings, particularly in the HVACR sector, through acquisitions like Aspen Manufacturing. Additionally, CSW Industrials plans to transition to the New York Stock Exchange, which is seen as a strategic move to enhance shareholder value and liquidity. The company remains vigilant about potential tariff impacts on its Contractor Solutions segment and has implemented pricing strategies to mitigate these effects.
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