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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Capital Southwest Corporation (XNAS:CSWC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
CSWC
Name:
CAPITAL SOUTHWEST CORPORATION (XNAS:CSWC)
Sector:
- 100293.00K
Industry:
Asset Management
CEO:
Mr. Bowen Diehl
Total Employees:
23
Our Technological Advancement Rating
Our Rating:
-
-
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF CAPITAL SOUTHWEST CORPORATION(CSWC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND ASSET MANAGEMENT INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
19.05
One Month Price Target:
$19.17
Six Month Price Target :
$19.8
Likely Price in One Year's Time:
Ticker:
$20.55
Likely Trading Range Today Under (Normal Volatility)
$18.97
Price Upper limit ($) :
$19.14
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$18.03
This week:
$16.76
This month :
$14.47
Other Primary facts
Market Cap:
517.58M
Market Cap Classification:
Small Cap
Number of Shares
IPO Date:
27.53M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
15.17%
-18.87%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$23.80
$21.64
$14.30
$16.46
Medium risk (<10%) entry points
Buy Call
Sell Call
$20.93
Buy Put:
Sell Put:
$20.47
$17.16
$17.63
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
CSWC
Sharpe Ratio:
0.21%
Comparison:
CSWC, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -73.33% lower than the industry
& is -90.59% lower than the market/S&P 500 average
Average Returns/Yield of
CSWC
Daily returns:
0.01%
Weekly returns:
0.07%
Monthly returns:
0.29%
Yearly returns:
9.18%
Comparison of returns:
Average annual returns/yield (last 3 years) is -62.17% below industry average
Classification:
CSWC, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.71
Statistical test of Returns:
CSWC has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.62%
Weekly Volatility:
5.87%
Monthly Volatility:
11.74%
Yearly Volatility:
40.65%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.87%
Volatility in last five trading days has been -28.80% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.37%
Weekly VaR:
-12.02%
Monthly VaR:
-24.04%
How Much Can the price of
CSWC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-21%
Worst case (decline):
-83.27%
This translates to price declining to:
$15.03
This translates to price declining to:
$3.19
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
CSWC is a 69.65% riskier investment compared to the market/S&P 500 & is 45.34% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 0.98% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
CSWC
Beta in relation to market/S&P 500--1.17
Expected beta in 1 year's time:
0.754
Expected beta in 3 year's time:
1.066
Unlevered (debt free) Beta:
0.539
Beta in relation to Nasdaq (XNAS):
0.596
Beta in relation to all global stocks::
0.582
Beta Comparison & Analysis
Beta of competitors/peers::
0.788
Beta is 48.73% higher than peers
Average Industry Beta:
1.694
Beta is -30.86% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
-
-
Alpha provided | Alpha Analysis
Alpha provided:
-0.077
Alpha is 38.18% above industry average alpha yield
Alpha is -490% below the market average
Analysis of Cost of Capital of
CSWC
Equity cost of capital:
0.112
Equity cost of capital is -24.27% below industry mean WACC
Unlevered (without debt) cost of capital:
5.14%
Before-tax cost of debt:
4.36%
After-tax cost of debt:
3.45%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.45%
WACC is -5.00% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$1.94
Revenue growth rate per share of (3Y):
1.42
Annual revenue growth rate is -90.78% below industry average
EPS:
$2.63
Expected Annual growth rate of EPS (3Y):
-7.78%
Expected future EPS growth rate is -128.01% lower than the Asset Management industry
Free cash flow (FCF) per share:
-
Balance sheet equity growth per share: 82.24%
Equity growth rate per share is 289.15% higher than the industry
Debt per share
$16.40
EBITDA per share
$2.06
Valuation Analysis Today of
CSWC
P/E Ratio:
9.49
P/E Ratio of Competitors/Peers:
14.53
P/E ratio is -34.71% lower than main peers & is -41.24% lower than the industry
Stock price/value with industry average P/E ratio: $42.47
CSWC is -55.14% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
9.83
Price to sales ratio is 43.52% above the industry mean
P/B (Price to book value ratio):
1.42
-
-
Net income growth rate (3Y):
9.77%
Net income growth rate is -93.28% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 34.55%
Dividend yeild: 13.75%
Previous Dividend: $0.63
Previous adjusted dividend: $0.63
Previous Dividend: $2.62
Expected next dividend best case: $0.85
Expected next dividend worst case: $0.41
Average dividend payment (long-term): $0.43
Average dividend increase/decrease (growth rate) % per period: 73.20%
Expected next dividend payment date: 28/09/2022
Expected next dividend record date: 13/09/2022
-
Previous dividend payment date: 30/06/2022
Previous dividend record date: 15/06/2022
-
Dividend History:
2022-06-14--$0.63
2021-12-14--$0.97
2021-06-14--$0.53
2022-03-14--$0.48
2021-09-14--$0.54
2021-03-12--$0.52
Dividend growth rate is 1225.74% higher than the average industry
In-depth Debt & Leverage Analysis
Debt to equity ratio:
122.67%
Net debt to equity ratio:
118.18%
Debt to assets ratio:
54.01%
Net debt to assets ratio:
52.03%
Debt-to-asset ratio is 3.34% above industry average
Ability to repay debt:
Interest coverage ratio:
2.88
Interest coverage ratio is -95.16% less than industry average
Looking forward:
Debt growth rate:
25.72%
Annual debt growth is -472% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.491
Statistical significance of correlation:
CSWC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.576
Stock price is -14.75% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.576
Correlation of price movement with Nasdaq (^IXIC):
0.038
Covariance of price movement with the market:
0.058
Kurtosis
13.361
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-0.874
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
CSWC
Gross Profit Margin Ratio:
100%
Operating Profit Margin Ratio:
0.00%
-
Net Profit Margin Ratio:
100%
Effective Tax Rate:
4.30%
Effective tax rate is -82.38% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
9.06%
Return on equity (ROE) is -64.15% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
3.99%
Return on assets (ROA) is -31.61% lower than the industry
Financial Leverage:
2.2x
Current Ratio:
0
-
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 1.4 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
2.3M
Each employee generates 67% more revenue than industry average revenue per employee
EBITDA generated per employee:
2.5M
Each employee generates -424% less EBITDA than industry average revenue per employee
Profit generated per employee:
1.5M
Each employee generates -217% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 4360.6K
Each employee generates 3533% more free cash flow than industry average revenue per employee
Assets/Capital per employee
0.0K
Each employee generates 3533% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
CSWC
KVSB
ONE EQUITY PARTNERS OPEN WATER I CORP. (XNAS:OEPW)
GUARANTY BANCSHARES, INC. (XNAS:GNTY)
MVB FINANCIAL CORP. (XNAS:MVBF)
BANK OF MARIN BANCORP (XNAS:BMRC)
OXFORD LANE CAPITAL CORP. (XNAS:OXLCM)
BRIDGEWATER BANCSHARES, INC. (XNAS:BWB)
Pioneer Merger Corp (XNAS:PACX)
FARMERS NATIONAL BANC CORP. (XNAS:FMNB)
Current Analyst Ratings
Strong buy�8%
Buy�0%
Hold�4%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
12/31/21
Revenue:
53.34M
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
18.32M
-
6.17M
6.17M
-
12.30M
18.47M
65.40M
19.70M
2.12M
56.68M
-
33.36M
34.86M
1.50M
33.36M
Statement of Cash Flow
Date:
Period:
502.00K
Differed Income Tax :
-
Stock Based Compensation :
-
Change in Working Capital :
- 7319.00K
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
- 108618.00K
Net Cash Provided by Operating Activities:
- 100293.00K
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
6/30/21
2022
Q1
16.54M
-
16.54M
17.28M
-
-
-
-
-
-
798.65M
-
-
-
836.05M
836.05M
-
-
117.00K
-
-
-
451.55M
-
451.55M
919.50M
467.95M
6.14M
1.52M
-
360.44M
June 30, 2021 at 6:00:00 AM
-
368.10M
836.05M
-
451.55M
435.0M
-
-
-
-
27.70M
-
- 11528.00K
69.06M
85.22M
-
- 15070.00K
16.54M
31.61M
- 100293.00K
-
- 100293.00K
Our Proprietary Portfolio Rating
Our Rating:
-
Price Forecast/Expected Price in Next 5 Years of
CSWC
2023
2024
2025
2026
2027
$20.65
$29.57
$31.90
$34.41
$37.12