CSW Industrials, Inc. (CSWI) | Investment Case

1. Company Snapshot

1.a. Company Description

CSW Industrials, Inc.operates as a diversified industrial company in the United States and internationally.It operates through three segments: Contractor Solutions, Engineered Building Solutions, and Specialized Reliability Solutions.

The Contractor Solutions segment provides cements, diffusers, grilles, registers, solvents, thread sealants, traps, and vents for use in HVAC/R, plumbing, general industrial, architecturally, and specified building products.The Engineered Building Solutions segment offers architectural railings and associated services; fire and smoke protection solutions; and pre-engineered and custom architectural building components for use in architecturally specified building products.The Specialized Reliability Solutions segment provides compounds, lubricants, lubricant management products, and sealants; and contamination control, industrial maintenance and repair, and operations solutions for use in energy, general industrial, mining, and railing markets.

The company was incorporated in 2014 and is headquartered in Dallas, Texas.

Show Full description

1.b. Last Insights on CSWI

The recent performance of CSW Industrials, Inc. was driven by several factors, including the company's record fiscal Q4 earnings growth, which was fueled by a 9% increase in revenue to $231 million and a 45% rise in adjusted EBITDA to $60 million. The company's adjusted earnings per share (EPS) also hit a record high of $2.24, surpassing the Zacks Consensus Estimate of $2.23 per share. Additionally, CSW Industrials reported record full-year results, with revenue increasing by 12% to $844 million and adjusted EBITDA rising by 53% to $193 million.

1.c. Company Highlights

Last Price	305.1
Change Percentage	0.00%
Open	306.13
Previous Close	305.1
Market Cap ( Millions)	4853
Volume	71526
Year High	436.5
Year Low	249.84
M A 50	307.55
M A 200	342.51

FCF Yield	3.21%
Dividend Yield	0.36%
ROE	11.59%
Debt / Equity	74.76%
Net Debt / EBIDTA	330.11%
Price To Book	4.7
Price Earnings Ratio	39.53
Price To FCF	31.17
Price To sales	5.03
EV / EBITDA	25.3

2. CSW Industrials Delivers Record Revenue Amidst Strategic Acquisitions

CSW Industrials reported record fiscal third-quarter revenue of $233 million, a 20% year-over-year increase driven primarily by acquisitions, partially offset by a 2.9% decline in consolidated organic revenue. Adjusted EBITDA grew 7% to a record $45 million, while adjusted EPS was $1.42, down 21% due to higher interest expense. Actual EPS came out at $2.47, slightly below estimates of $2.62. The company's net debt to EBITDA ratio is 2.3 times, within its target range, indicating a manageable debt burden. The company's investment of approximately $1 billion in acquisitions over the last year demonstrates confidence in the long-term strength of residential HVACR, plumbing, and electrical end markets.

Publication Date: Feb -08

                                    📋 Highlights
                                    Record Revenue & EBITDA Growth::
                                                FY3Q revenue hit $233M (+20% YoY) with adjusted EBITDA at $45M (up 7%), driven by $676.5M in acquisitions (Mars Parts, Hydrotech, ProAction Fluids).
Stock Buybacks & Debt Management::
                                                $70M in open-market share repurchases and a 2.3x net debt/EBITDA ratio, aligned with target ranges despite $1B in annual acquisition investments.
Margin Expansion Targets::
                                                Aims for 30% EBITDA margin via synergies, with $10M+ cost synergies from recent acquisitions and margin recovery in Contractor Solutions post-one-off costs.
Safety & Operational Efficiency::
                                                Total reportable incident rate (TRIR) improved to 1.1 in 2025, down from 1.2, alongside pricing actions offsetting material inflation in SRS segment.

                                

Acquisition Strategy and Integration

The company completed three acquisitions, including Mars Parts for $650 million, Hydrotech's Holdings, and ProAction Fluids for $26.5 million. The Mars Parts acquisition is not expected to significantly alter the geographic mix of cost of goods sold after product harmonization is complete. CSW Industrials repurchased $70 million of its stock in the open market during the quarter, demonstrating its commitment to creating sustainable shareholder value through prudent capital management and operational excellence. The acquisition strategy is expected to exceed initial cost synergies of $10 million.

Segment Performance and Outlook

In the SRS segment, adjusted EBITDA margin contracted due to mix and softer energy markets. However, the company implemented a price increase, which has offset material inflation, and expects pricing to fully offset material inflation in the segment. The EBS business is cyclical, but the company sees organic growth opportunities through new product development and is well-positioned for when the market recovers. The company guides for higher-margin backlog to flow through to EPS, with expectations to see this impact as they exit the fiscal year.

Valuation and Growth Prospects

With a P/E Ratio of 37.92 and an EV/EBITDA of 24.41, the market appears to be pricing in significant growth expectations. Analysts estimate next year's revenue growth at 7.3%. The company's ROIC of 6.55% and ROE of 11.59% indicate a reasonable return on capital. As the company continues to prioritize capital allocation, deleveraging, and investing in growth opportunities, its commitment to creating sustainable shareholder value is evident.

Operational Efficiency and Safety

The company achieved a total reportable incident rate (TRIR) of 1.1 in calendar year 2025, an improvement from 1.2 in 2024, demonstrating its focus on operational safety. Geographically, the cost of goods sold is expected to be around 10% in Vietnam, primarily through the owned facility, in the low thirties as a percentage of Contractor Solutions' cost of goods sold.

3. NewsRoom

Here's What Key Metrics Tell Us About CSW Industrials (CSW) Q3 Earnings

Jan -29

Source: zacks.com

CSW Industrials (CSW) Misses Q3 Earnings and Revenue Estimates

Jan -29

Source: zacks.com

CSW Industrials (CSW) Q2 Earnings and Revenues Top Estimates

Oct -30

Source: zacks.com

Will CSW Industrials (CSW) Beat Estimates Again in Its Next Earnings Report?

Oct -13

Source: zacks.com

CSW Industrials (CSW) is an Incredible Growth Stock: 3 Reasons Why

Aug -25

Source: zacks.com

3 Reasons Growth Investors Will Love CSW Industrials (CSW)

Aug -07

Source: zacks.com

CSW Industrials (CSWI) Q1 Revenue Up 17%

Aug -01

Source: fool.com

CSW Industrials (CSW) Beats Q1 Earnings Estimates

Jul -31

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.68%)

6. Segments

Contractor Solutions

Expected Growth: 5.5%

Contractor Solutions' 5.5% growth is driven by increasing demand for HVAC and plumbing products, expansion into e-commerce channels, and strategic acquisitions. Additionally, the segment benefits from a strong reputation for quality and reliability, leading to customer loyalty and retention. Furthermore, investments in digital marketing and sales force expansion have enhanced the segment's competitive position.

Specialized Reliability Solutions

Expected Growth: 6.2%

CSW Industrials' Specialized Reliability Solutions segment growth of 6.2% is driven by increasing demand for predictive maintenance and reliability services in industries such as oil and gas, power generation, and transportation. Additionally, the adoption of IoT and digital technologies is fueling growth, as companies seek to optimize asset performance and reduce downtime.

Engineered Building Solutions

Expected Growth: 5.8%

CSW Industrials' Engineered Building Solutions segment growth of 5.8% is driven by increasing demand for energy-efficient and sustainable building solutions, expansion in the industrial and commercial construction markets, and strategic acquisitions. Additionally, the segment benefits from a strong backlog of orders and a focus on innovative product offerings, such as modular and prefabricated buildings.

7. Detailed Products

Rust-Oleum Industrial Coatings

A line of high-performance coatings for industrial applications, including epoxy, polyurethane, and acrylic coatings.

Rust-Oleum Consumer and Craft Coatings

A range of coatings for consumer and craft applications, including spray paints, brush-on paints, and specialty coatings.

Diamond Crystal Water Treatment Products

A line of water treatment products, including water softeners, conditioners, and filters.

Thermal Control Products

A range of thermal control products, including heat shields, thermal insulation, and temperature sensors.

Sealants and Adhesives

A line of sealants and adhesives for industrial and commercial applications, including epoxy, silicone, and acrylic-based products.

8. CSW Industrials, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for CSW Industrials, Inc. is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for CSW Industrials, Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for CSW Industrials, Inc. is medium due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for CSW Industrials, Inc. is high due to the low barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for CSW Industrials, Inc. is high due to the presence of several established competitors in the market.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	22.18%
Debt Cost	7.56%
Equity Weight	77.82%
Equity Cost	7.56%
WACC	7.56%
Leverage	28.49%

11. Quality Control: CSW Industrials, Inc. passed 8 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Watts Water Technologies

A-Score: 6.0/10

Value: 2.7

Growth: 6.9

Quality: 8.0

Yield: 1.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

A O Smith

A-Score: 5.8/10

Value: 4.0

Growth: 5.7

Quality: 7.8

Yield: 4.0

Momentum: 4.5

Volatility: 9.0

1-Year Total Return ->

Donaldson

A-Score: 5.6/10

Value: 2.7

Growth: 5.8

Quality: 6.8

Yield: 2.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

ITT

A-Score: 5.6/10

Value: 2.7

Growth: 6.7

Quality: 6.7

Yield: 2.0

Momentum: 8.0

Volatility: 7.3

1-Year Total Return ->

Nordson

A-Score: 5.1/10

Value: 2.5

Growth: 5.8

Quality: 7.1

Yield: 2.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

CSW Industrials

A-Score: 4.1/10

Value: 1.7

Growth: 8.1

Quality: 7.7

Yield: 0.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

9.60%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.56%

CSW Industrials, Inc. - US1264021064

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CSWI

1.c. Company Highlights

Higher Growth

Expensive

Better Quality

Earnings Beats

Revenues Beats

Strong Momentum

Revenues Miss

Earnings Miss

Less Volatile

2. CSW Industrials Delivers Record Revenue Amidst Strategic Acquisitions

Acquisition Strategy and Integration

Segment Performance and Outlook

Valuation and Growth Prospects

Operational Efficiency and Safety

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.68%)

6. Segments

Contractor Solutions

Expected Growth: 5.5%

Specialized Reliability Solutions

Expected Growth: 6.2%

Engineered Building Solutions

Expected Growth: 5.8%

7. Detailed Products

Rust-Oleum Industrial Coatings

Rust-Oleum Consumer and Craft Coatings

Diamond Crystal Water Treatment Products

Thermal Control Products

Sealants and Adhesives

8. CSW Industrials, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: CSW Industrials, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

305.1$

Current Price

305.1$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA