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1. Company Snapshot

1.a. Company Description

Core & Main, Inc.distributes water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies, and professional contractors in the municipal, non-residential, and residential end markets in the United States.Its products include pipes, valves, hydrants, fittings, and other products and services; storm drainage products, such as corrugated piping systems, retention basins, inline drains, manholes, grates, geosynthetics, and other related products; fire protection products, including fire protection pipes, sprinkler heads and other devices, fire suppression systems, and related accessories, as well as fabrication services; and meter products, such as smart meter products, installation, software and other services.


The company's specialty products and services are used in the maintenance, repair, replacement, and construction of water and fire protection infrastructure.Core & Main, Inc.was founded in 1874 and is headquartered in St. Louis, Missouri.

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1.b. Last Insights on CNM

Core & Main's recent performance faces pressure due to collapsing residential demand, rising costs, and execution missteps. The company's 2Q25 results showed weak organic growth, deteriorating profitability, and a sharp downgrade in residential lot development outlook. Management's cost-control efforts will take time, leaving margins pressured. JPMorgan raised its price target to $64 but noted muted volume expectations for the back half of 2025. A sell rating was issued due to these challenges. (Source: Core & Main: The Growth Narrative Is Under Huge Pressure (Rating Downgrade))

1.c. Company Highlights

2. Core & Main's Q3 2025 Earnings: Steady Growth Amidst Favorable Market Conditions

Core & Main reported net sales of $2.1 billion, a 1% increase from the previous year, driven by contributions from acquisitions and strong sales initiatives. Gross margin improved 60 basis points to 27.2%, driven by private label initiatives and disciplined purchasing. Adjusted diluted EPS increased 3% to $0.89, while actual EPS came in at $0.72, slightly below estimates of $0.731. The company's financial performance was characterized by steady demand from municipal projects, which account for over 40% of sales.

Publication Date: Dec -20

📋 Highlights
  • Municipal Projects:: Drive 40%+ of sales with stable demand from state/local funding (95% of funding).
  • Data Center Growth:: Low single-digit exposure but rapid growth driver, leveraging geographic diversity and service quality.
  • Financial Performance:: Net sales rose 1% to $2.1B; EBITDA at $274M, with gross margin up 60 bps to 27.2%.
  • Cost Efficiency:: $30M annualized SG&A savings achieved, with $5M saved in Q3 and full savings in FY26.
  • Expansion Strategy:: 5 greenfields opened YTD, targeting markets like Denver/Houston; $684M share repurchase capacity.

Business Segment Performance

The municipal segment remains a significant contributor, with funding from state and local sources providing a stable source of demand. Nonresidential growth was driven by infrastructure projects, including data centers, which require significant water infrastructure. Residential sales, while a smaller proportion of overall sales, are expected to see pent-up demand release in the future. As the company noted, "data centers represent a growing driver of growth, requiring more water infrastructure and driving demand for housing, retail, and commercial services."

Growth Initiatives and Margin Expansion

Core & Main is focused on driving long-term growth through product expansions, geographic growth, and private label initiatives. The company expects to continue expanding gross margins annually, driven by private label growth, purchasing, and pricing initiatives. Private label sales are expected to drive 10-20 basis points of annual growth, with a long-term target of 10-15% private label sales.

Valuation and Outlook

With a P/E Ratio of 23.57 and an EV/EBITDA ratio of 13.76, the market appears to be pricing in moderate growth expectations. Analysts estimate revenue growth of 3.2% for next year. Given the company's diversified model, strategic investments, and balance sheet flexibility, it is well-positioned to capitalize on growing demand from municipal and nonresidential projects, including data centers. The company's commitment to driving annual SG&A rate improvement and cost savings initiatives should also support long-term profitability.

Cost Management and M&A

Core & Main has implemented $30 million in cost cuts, primarily in personnel-related costs, and expects to continue driving productivity opportunities through technology investments. The company has an active M&A pipeline, with several opportunities on the horizon, and expects to deploy capital for M&A, invest organically, and continue share repurchases.

3. NewsRoom

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Core & Main, Inc. $CNM Shares Sold by Principal Financial Group Inc.

Feb -08

Source: defenseworld.net

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Core & Main Closes Acquisition of Pioneer Supply

Jan -26

Source: businesswire.com

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5 Momentum Stocks to Buy for January After a Mixed December

Jan -07

Source: zacks.com

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Core & Main (CNM) Just Overtook the 200-Day Moving Average

Jan -06

Source: zacks.com

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Core & Main Signs Agreement to Acquire Pioneer Supply

Jan -05

Source: businesswire.com

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Surging Earnings Estimates Signal Upside for Core & Main (CNM) Stock

Jan -05

Source: zacks.com

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Did Core & Main's Nearly 30% Post-Earnings Stock Drop Set Up an $18 Million Entry?

Dec -28

Source: fool.com

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4 Manufacturing Tools Stocks to Watch on Prospering Industry Trends

Dec -23

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.52%)

6. Segments

Pipes, Valves and Fittings

Expected Growth: 5.5%

Core & Main's 5.5% growth in Pipes, Valves, and Fittings is driven by increasing infrastructure spending, replacement of aging water and gas systems, and rising demand for water conservation and efficiency solutions. Additionally, the company's strong distribution network and strategic acquisitions contribute to its growth momentum.

Storm Drainage

Expected Growth: 5.8%

Storm Drainage from Core & Main, Inc. growth of 5.8% driven by increasing infrastructure spending, urbanization, and climate change mitigation efforts. Rising demand for efficient water management systems, government initiatives for flood control, and growing adoption of sustainable drainage solutions also contribute to this growth.

Fire Protection

Expected Growth: 5.2%

Core & Main's Fire Protection segment growth of 5.2% is driven by increasing demand for fire safety systems in commercial and residential buildings, stringent government regulations, and rising adoption of advanced fire suppression technologies. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to its growth momentum.

Meter

Expected Growth: 5.6%

Meter from Core & Main, Inc. growth of 5.6% driven by increasing demand for water infrastructure upgrades, replacement of aging infrastructure, and adoption of smart metering technologies. Additionally, government initiatives and regulations focusing on water conservation and efficiency also contribute to the growth.

7. Detailed Products

Waterworks

Core & Main, Inc. provides a wide range of waterworks products, including pipes, valves, and fittings, to support the construction and maintenance of water and wastewater infrastructure.

Hydrants

The company offers a variety of hydrants, including dry and wet barrel hydrants, for firefighting and other applications.

Valves

Core & Main, Inc. supplies a broad range of valves, including gate, globe, and check valves, for water and wastewater applications.

Fittings

The company provides a wide selection of fittings, including elbows, tees, and couplings, for piping systems.

Pumps

Core & Main, Inc. offers a variety of pumps, including centrifugal and submersible pumps, for water and wastewater applications.

Meters

The company supplies a range of meters, including water and gas meters, for measuring fluid flow and consumption.

Pipe

Core & Main, Inc. provides a variety of pipes, including PVC, ductile iron, and steel pipes, for water and wastewater applications.

Fire Protection

The company offers a range of fire protection products, including fire hydrants, valves, and fittings, for commercial and industrial applications.

8. Core & Main, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Core & Main, Inc. is medium due to the availability of alternative products and services in the water, sewer, and fire protection markets.

Bargaining Power Of Customers

The bargaining power of customers for Core & Main, Inc. is low due to the company's strong relationships with its customers and its ability to provide customized solutions.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Core & Main, Inc. is medium due to the company's dependence on a few large suppliers and the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants for Core & Main, Inc. is low due to the high barriers to entry in the water, sewer, and fire protection markets, including regulatory hurdles and the need for significant capital investment.

Intensity Of Rivalry

The intensity of rivalry for Core & Main, Inc. is high due to the competitive nature of the water, sewer, and fire protection markets, with several large players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 57.12%
Debt Cost 3.95%
Equity Weight 42.88%
Equity Cost 9.68%
WACC 6.41%
Leverage 133.22%

11. Quality Control: Core & Main, Inc. passed 7 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

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Value: 4.0

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.0

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Growth: 7.8

Quality: 3.9

Yield: 1.0

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Quality: 6.1

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Core & Main

A-Score: 4.6/10

Value: 3.6

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

56.72$

Current Price

56.72$

Potential

-0.00%

Expected Cash-Flows