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On Friday, Raymond (NSE:RYMD) James financial analyst Robert Dodd adjusted the price target for Capital Southwest Corp (NASDAQ:CSWC) to $23 from the previous $24, while retaining an Outperform rating on the stock. The revision followed the company’s fourth fiscal quarter results for 2025, which aligned with market expectations. The new target sits within the broader analyst range of $20.50 to $25.00, with InvestingPro data showing the stock currently trading at $20.86 with a P/E ratio of 14.24.
Capital Southwest Corp reported its results for the fourth fiscal quarter ending March 2025, demonstrating a robust earnings performance and an increase in net asset value (NAV) per share. This growth in NAV is notably in contrast to the declining NAV experienced by many of the company’s peers during the same period. Dodd’s commentary highlighted the firm’s solid quarterly earnings and its capacity to grow its NAV per share in a challenging quarter for the industry. InvestingPro data reveals impressive revenue growth of 14.77% in the last twelve months, with total revenue reaching $204.44 million.
Dodd emphasized the favorable risk/reward profile of Capital Southwest, describing it as a lower leverage Business Development Company (BDC) that is generating substantially higher than average returns on equity (ROEs). This assessment suggests confidence in the company’s financial health and its potential for investor returns. InvestingPro analysis supports this view, highlighting the company’s strong financial position with a current ratio of 28.61 and an impressive dividend yield of 12.22%. Notably, the company has maintained dividend payments for 43 consecutive years, demonstrating remarkable consistency in shareholder returns.
The maintained Outperform rating indicates that Raymond James anticipates the company’s stock to perform better than the average total return of the stocks covered by the analyst in the sector over the next six to twelve months. The new price target of $23 represents the firm’s valuation of the stock based on projected future earnings and other investment metrics.
Capital Southwest Corporation, a BDC, provides capital to middle market companies for growth financing, acquisitions, leveraged buyouts, and recapitalizations. The company’s financial health and market performance are closely monitored by investors and analysts alike, as changes in price targets and ratings can influence market perceptions and investment decisions.
In other recent news, Capital Southwest Corporation announced its first-quarter earnings for 2025, which did not meet analysts’ expectations for earnings per share (EPS) and revenue. The company reported an EPS of $0.54, falling short of the projected $0.6175, and revenue of $52.34 million, which was below the expected $53.17 million. Despite these misses, Capital Southwest experienced an increase in its net asset value per share and a reduction in loans on non-accrual. The company also received a second SBIC license, which enhances its access to capital. Analysts have not provided any recent upgrades or downgrades for the company. Capital Southwest’s Chief Executive Officer, Michael Sarner, described 2025 as a productive year, highlighting strategic moves in the private equity market. The company plans to add 3-5 new platform companies and potentially deploy $75-100 million in new capital. While facing challenges such as trade policy changes and competitive lending, Capital Southwest remains focused on strategic growth and maintaining strong relationships within the private equity sector.
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