Start here if you're new
what it is
CSW sells the parts and sealants that keep HVAC, plumbing, rail, and industrial systems working when failure gets expensive fast.
how it gets paid
Last year Csw Industrials made $878M in revenue.
why it's growing
Revenue grew 10.8% last year. Revenue rose to $233 million in the fiscal third quarter.
what just happened
CSW's fiscal third quarter was a clean reminder that 20% sales growth means less when profit falls.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
80/100 earnings predictability — you can trust these numbers
38.9x trailing p/e — you're paying up for this one
0.5% dividend yield — cash in your pocket every quarter
9.5% return on capital — nothing to write home about
xvary composite: 62/100 — average
What they do
CSW sells the parts and sealants that keep HVAC, plumbing, rail, and industrial systems working when failure gets expensive fast.
This is a boring-products company with pricing power. Contractor Solutions made 67% of fiscal 2024 sales and 77% of operating income, which means the biggest unit is also the fattest one. If your HVAC or plumbing repair depends on a specific adhesive, lubricant, or replacement part, switching is annoying, risky, and rarely worth the savings.
How they make money
$878M
annual revenue · their business grew +10.8% last year
total revenue
$878M
+10.8%
The products that matter
contractor-facing hvac and plumbing products
Contractor Solutions
$0.6B · 67% of revenue
this is roughly a $0.6B segment and 67% of revenue. if you are underwriting CSW, this is the engine you are really underwriting.
67% of revenue
reliability and maintenance products
Specialized Reliability
$0.17B · 19% of revenue
at about $0.17B and 19% of revenue, this adds some diversification. it is still too small to bail out the whole story if contractor demand softens.
19% of revenue
code-driven building products
Engineered Building
$0.13B · 14% of revenue
this is the smallest segment at about $0.13B and 14% of revenue. useful, yes. big enough to change the whole narrative on its own, no.
14% of revenue
Key numbers
38.9x
trailing p/e
P/E ratio → how many dollars you pay for $1 of profit → so what: you are paying a premium price for a company guiding to just 6.0% earnings growth.
25.0%
operating margin
Operating margin → profit after running the business, before interest and taxes → so what: this is a very profitable industrial company, which is why any tariff squeeze matters.
$768M
long-term debt
Long-term debt → money owed over many years → so what: debt is 14% of capital, which is fine today, but it matters more after acquisition-led growth.
9.5%
return on capital
Return on capital → profit generated from the money tied up in the business → so what: it is decent, but it does not scream bargain at 38.9x earnings.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 60 / 100
- long-term debt $768M (14% of capital)
- net profit margin 13.4% — keeps 13 cents of every dollar in revenue
- return on equity 12% — $0.12 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in CSW 3 years ago → it's now worth $21,020.
The index would have given you $14,540.
source: institutional data · total return
What just happened
missed estimates
CSW's fiscal third quarter was a clean reminder that 20% sales growth means less when profit falls.
Revenue rose to $233 million in the fiscal third quarter, driven entirely by acquisitions, while quarterly EPS fell to $0.62 from $1.60 a year earlier. Management pointed to higher raw material costs tied to tariffs in Engineered Building.
$233M
revenue
$0.62
eps
42.3%
gross margin
the number that mattered
The number that mattered was $0.62 EPS because it came in far below the $1.80 estimate, a miss of 65.56%, despite double-digit sales growth.
-
margins were squeezed in csw industrials’ fiscal third quarter (ended december 31st).
-
although sales were up 20%, to $233 million (thanks entirely to acquisitions), share net fell to $0.62.interest expense on a big increase in long-term debt used to fund the acquisitions played a big part in the margin squeeze. also, costs related to these buys, including amortization of intangible assets, increased operating and sg&a expenses.
-
too, inflationary pressures on raw materials due to higher tariffs in the engineered building solutions segment raised costs.
-
still, the stock price is up 15% since our december 12th missive.
-
investors became more on the company’s long-term external expansion strategy.of note was the $650 million mars parts acquisition, which is expected to revive top-line organic growth.
source: company earnings report, 2026
Get this snapshot in your inbox
This page, delivered free — plus weekly updates when the numbers change. plain english, no spam.
weekly updates
earnings alerts
plain english
no spam
What could go wrong
the #1 risk here is acquisition math stopping penciling out. CSW spent roughly $1B on acquisitions against a $0.9B revenue base, and the latest quarter showed what happens when the cost stack hits before the earnings payoff does.
high
acquisition engine slows
annual revenue is $0.9B, and the company has leaned on roughly $1B of acquisitions to get bigger. if deals slow down or get more expensive, the growth rate gets exposed fast.
with revenue estimated at $1B for fy2026, even a modest integration miss becomes visible quickly.
high
margin damage lasts longer than one quarter
gross margin was 39.7%, and quarterly EPS fell from $1.60 to $0.62. that is not a rounding error. it is what a premium multiple looks like when costs outrun pricing.
if margin pressure sticks, 38.9x trailing earnings becomes very hard to defend.
med
debt and interest expense stay elevated
long-term debt is $768M, or 14% of capital. that is manageable on paper, but it matters more when acquired earnings arrive with amortization and higher financing costs attached.
the latest quarter already showed how interest expense can eat into what looked like a solid revenue print.
med
one segment still carries most of the story
Contractor Solutions is 67% of revenue. Specialized Reliability and Engineered Building together are 33%.
that is enough diversification to sound balanced, but not enough to fully absorb a slowdown in the core contractor channel.
when a stock trades at 38.9x trailing earnings and the latest quarter's EPS falls from $1.60 to $0.62, you do not have much room for another messy integration quarter.
source: institutional data · regulatory filings · risk analysis
Pay attention to
risk
gross margin staying below 40%
39.7% was the quarter's signal flare. if that number does not recover, the premium multiple starts looking fragile.
metric
EPS rebound from $0.62
the business can survive one messy quarter. it does not deserve 38.9x trailing earnings if $0.62 starts looking normal.
calendar
next earnings and integration commentary
you want management to show the acquired businesses are adding revenue without permanently dragging margins and interest expense higher.
trend
institutional support holding up
138 buyers versus 110 sellers in 4q2025 is positive, but it is not overwhelming. if that balance flips, the market may get less patient with the roll-up story.
Analyst rankings
short-term outlook
average
outlook rank 3 — in human-speak, analysts think the stock behaves mostly like the market until the earnings story gets cleaner.
risk profile
average
risk rank 3 — this is not a collapse setup, but it is not a bunker either.
chart momentum
average
momentum rank 3 — the chart is fine, not forceful. from here, price strength needs help from fundamentals.
earnings predictability
80 / 100
management has usually produced a readable earnings pattern. the latest quarter broke that rhythm, which is why the next print matters more than usual.
source: institutional data
Institutional activity
138 buyers vs. 110 sellers in 4q2025. total institutional holdings: 16.9M shares.
source: institutional data
Price targets
3-5 year target range
$218
$496
$295
current price
$357
target midpoint · +21% from current · 3-5yr high: $385 (+30% · 7% ann'l return)
Want the deeper analysis?
The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
see plans from $5/moThe deep dive