Core & Main, Inc. (CNM): what the price requires
At today's price, Core & Main, Inc. (CNM) is priced for +3.7% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/CNM
Headline
| Field | Value |
|---|---|
| Ticker | CNM |
| Company | Core & Main, Inc. |
| Current price | $44.64/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 2.1% |
| Operating margin today | 9.8% |
| Margin compression implied | -7.7pp |
| Implied growth | 3.7% |
| Multiple paid | 14x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.68σ |
| cohort percentile (of 225 peers) | 16 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.80x | 5 | expensive |
| Earnings | 1.82x | 5 | expensive |
| Relative | 1.04x | 5 | expensive |
| Growth | 1.36x | 3 | expensive |
Families that justify the price: Relative Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.4%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $32.79 | 1.36x | yes | FCF base $0.6B, growth 0% (input: historical growth), terminal g 0.5%, WACC 7.4%, 5yr projection |
| DCF Exit Multiple | Growth | $43.87 | 1.02x | yes | Exit EV/EBITDA: 10.0x / 12.0x / 14.0x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $43.02 | 1.04x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 15.2x / 18.0x / 20.8x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $24.81 | 1.80x | yes | BV/sh $10.43, ROE (TTM) 22.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $38.05 | 1.17x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $28.90 | 1.54x | yes | Rev $7.6B, growth 0% (input: historical growth; tapered), Terminal P/S: 1.0x / 1.1x / 1.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $28.32 | 1.58x | yes | EPS $2.36, growth 9% (input: historical EPS growth), PEG=2.07 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $24.53 | 1.82x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.70B × (1−25%) / WACC 7.4% → EPV (no growth) |
| Residual Income | Asset | $35.72 | 1.25x | yes | BV $10.43 + 5yr PV of (ROE (TTM) 22.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $23.53 | 1.90x | yes | √(22.5 × EPS $2.36 × BVPS $10.43) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $44.63 | 1.00x | yes | EBITDA $0.92B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $21.87 | 2.04x | yes | FCF $608.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $21.04 | 2.12x | yes | SBC-adj FCF $0.59B (FCF $0.61B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $53.94 | 0.83x | yes | EPS $2.36 × (8.5 + 2×9.4%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $4.33 | 10.31x | yes | BV $10.43 × (ROIC 3.1% / WACC 7.4%) |
| P/Sales Sector | Relative | $97.68 | 0.46x | yes | Revenue $7.65B × sector P/S 2.5x |
| PEG Fair Value | Relative | $33.22 | 1.34x | yes | EPS $2.36 × (PEG 1.5 × growth 9.4% (input: historical EPS growth)) → PE 14.1x |
| Earnings Yield | Earnings | $25.51 | 1.75x | yes | EPS $2.36 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $2.0b |
| Net debt / NOPAT (after-tax) | 3.39x |
| Net debt / operating income (pre-tax) | 2.55x |
| Interest coverage | 6.6x |
| Share count CAGR (buyback) | -5.6% |
| Burning cash | no |
Bullet Takeaways
At $48.55 the stock prices in roughly 6.7% annual operating-profit growth over five years at about 15x operating income, a pace Core & Main has recently cleared. The stretch is in how long it must persist, not the rate, and the priced-in bet sits within the range of what the business has delivered.
The water and wastewater niche is genuinely defensible: the company estimates about 42% of fiscal 2024 net sales went to contractors and municipalities tied to aging-infrastructure repair, an end market that funds itself through utility rates rather than the housing cycle.
Net debt of about $2.0 billion against trailing operating income leaves leverage near 2.7x with interest coverage around 6.2x. That is carriable, but most of the term loan floats, so the balance sheet is the variable that decides whether the acquisition engine keeps running through a higher-rate stretch.
Bull Case
Start with the fear, because it is the obvious one: this is a distributor levered to construction, and construction is cyclical. Core & Main says so plainly, putting roughly 20% of fiscal 2024 net sales in U.S. residential and 38% in non-residential end markets, both sensitive to rates and starts (FY2025 10-K, accession 0001856525-25-000081). A reader who stops there sees a leveraged building-products name at a full multiple and walks away. The data undercuts that read in one number. The same disclosure puts about 42% of net sales in the municipal channel, water and wastewater work driven by aging pipe, utility rates, and state and local funding rather than by housing (accession 0001856525-25-000081). That is the largest single slice of the business, and it is the part that does not move with the cycle the bears are afraid of.
The moat is scale in a fragmented trade. Management is direct that its size lets it secure distribution rights that are exclusive or limited to a few distributors in key categories, and supply products competitors cannot get (FY2025 10-K, accession 0001856525-25-000081). In waterworks distribution that matters more than it sounds: the catalog runs to thousands of low-value, high-mix items where availability and local stock decide who wins the job. The company calls its own industry fragmented and highly competitive, with pressure to consolidate (accession 0001856525-25-000081), and it is the consolidator, having identified a pipeline of adjacent product lines from municipal treatment to fire-protection fabrication to erosion control to roll up (accession 0001856525-25-000081). Among the peer set, SiteOne, Pool Corp, and Watsco run the same playbook of building scale through a sales-center network and supplier programs; Pool describes the logistics, fleet, and incentive infrastructure behind its centers in similar terms (POOL FY2025 10-K, accession 0001193125-26-074833). Core & Main is applying that model to the one distribution vertical with a public, non-discretionary funding source behind nearly half its revenue.
The near-term execution backs the thesis. Fiscal Q1 2026 (quarter ended May 3, 2026) put net sales at $1,910 million, net income up 7.6% to $113 million, diluted EPS up 9.6% to $0.57, and gross margin up 50 basis points to 27.2% on disciplined procurement and channel mix. Management reaffirmed full-year guidance of $7.8 to $7.9 billion in net sales and $950 to $980 million in adjusted EBITDA, and is opening eight to ten new locations this year against five already open. Share count has been shrinking at roughly 5.6% a year, so per-share progress is running ahead of the top line. The inversion frames the price as a bet on about 6.7% operating growth holding for five years, which is inside the company's recent record. If municipal demand stays funded and the bolt-on engine keeps running, the price is underwriting a pace the business has already shown it can hit.
Bear Case
Begin with the balance sheet, because it is where a distributor's optionality lives or dies. Core & Main carries about $2.0 billion of net debt against trailing operating income near $728 million, leverage close to 2.7x, with interest coverage around 6.2x. None of that is distress. The fragility is in the structure: a large share of the debt sits under a senior term loan tied to variable rates (FY2025 10-K, accession 0001856525-25-000081), and the company points readers to its own interest-rate discussion as a key factor affecting the business (accession 0001856525-25-000081). The bolt-on strategy that drives the bull case runs on that same debt capacity. In a stretch where rates stay high and municipal budgets tighten at the same time, the floating coupon climbs while the cash that funds acquisitions thins, and the consolidation flywheel slows from both ends at once.
The valuation X-ray says the price already assumes the flywheel keeps spinning. Across the methods that anchor to today's economics rather than to a growth story, the stock trades well above the central estimates: the simple excess-return read lands near $25, the perpetual-growth DCF near $32, and the asset and earnings-power families sit roughly two times below the current price. Only the relative-multiple lens, pricing the stock against sector peers, reaches the tape, landing near $43. Put plainly, the market is paying a peer multiple for a business whose own cash-flow and book-value math support a meaningfully lower number. That is not a mispricing to fade on its own, but it is a thin cushion: it means the entire case rests on growth continuing, with little support underneath if it stalls.
The end-market mix cuts both ways. The municipal anchor is real, but it does not insulate the other 58%. The 10-K is explicit that roughly 20% residential and 38% non-residential exposure tracks rates, housing starts, and broad construction activity (FY2025 10-K, accession 0001856525-25-000081), and the company notes its end markets are fragmented and highly competitive with pressure to consolidate (accession 0001856525-25-000081). A distributor's gross margin is also partly a commodity-price phenomenon; the recent 50-basis-point expansion came from procurement discipline and mix, not from a structural step-up, and that kind of gain is easier to give back than to bank. A buyer at today's price is paying for municipal durability, acquisition execution, and margin discipline to all hold together while carrying floating-rate leverage into whatever the rate path turns out to be.
Valuation
The model families disagree in a way that is itself the signal. The asset and earnings-power lenses, which value the business on book value and current sustainable profit, land near $25 and $32, roughly two times below the $48.55 price (June 27, 2026). The forward DCF that lets today's EBITDA multiple carry forward reaches about $47, and the relative-valuation read, pricing the stock at a sector-median P/E near 18x, lands about $43. So the only methods that get close to the tape are the ones that import the market's own multiple or assume the current run-rate persists; the methods grounded in present assets and present earnings do not. The blended X-ray across the applicable methods centers near $35.
Reading the price as a question rather than a target sharpens it. At $48.55 the market is paying about 15x company-wide operating income, which solves to roughly 6.7% annual operating-profit growth sustained for five years, computed at about a 9.1% cost of capital. That implied pace is within what Core & Main has recently delivered; the demand on the price is duration, not heroics. A separate reverse-DCF band that allows for reasonable forward growth spans about $55 at the low end to $86 at the base and $109 at the high end, which brackets the current price comfortably and reflects how much the answer swings with the growth-persistence assumption. One housekeeping note for anyone reconciling the figures: the trailing operating income read off the EDGAR quarterly filings is about $728 million, while the record basis used elsewhere reads about $930 million, a gap of roughly 28%. Those are two different measurement windows, not an error, and the leverage and coverage figures above use the more conservative EDGAR number.
Catalysts
Fiscal Q1 2026, reported for the quarter ended May 3, 2026, set the recent baseline: net sales of $1,910 million, net income up 7.6% to $113 million, diluted EPS up 9.6% to $0.57, adjusted diluted EPS of $0.72, and gross margin up 50 basis points to 27.2%. Management attributed the margin gain to disciplined product procurement and favorable channel mix. (Sources: Core & Main Q1 2026 release via StockTitan and the company's 8-K; Q1 2026 earnings call coverage on Yahoo Finance.)
The company reaffirmed full-year fiscal 2026 guidance of $7.8 to $7.9 billion in net sales and $950 to $980 million in adjusted EBITDA, implying a 12.2% to 12.4% EBITDA margin. The next set-piece is the fiscal Q2 print later in the year, where the watch items are whether municipal demand stays funded by state and local programs, whether residential and non-residential volumes hold, and whether gross margin sustains the recent step-up rather than giving it back.
On the growth engine, management opened five new locations in the quarter and is on track for eight to ten in fiscal 2026, alongside its standing bolt-on acquisition program. Watch for acquisition announcements, since the cadence and pricing of deals is the clearest read on whether the consolidation thesis is still compounding; the search did not surface a specific recent transaction. (Sources: Core & Main Q1 2026 earnings transcript via The Globe and Mail; GuruFocus earnings preview.)
Peer Cohorts (Per Segment, With Filing Citations)
Waterworks Distribution (whole company) (reported)
- FERG (Ferguson Enterprises Inc.)
- (no filing in the citation store)
- WSO (WATSCO INC)
- (no filing in the citation store)
- SITE (SiteOne Landscape Supply, Inc.)
- (no filing in the citation store)
- POOL (POOL CORPORATION)
- (no filing in the citation store)
- WCC (WESCO International, Inc.)
- (no filing in the citation store)
- DXPE (DXP Enterprises, Inc.)
- (no filing in the citation store)
- AIT (APPLIED INDUSTRIAL TECHNOLOGIES, INC.)
- (no filing in the citation store)
- MSM (MSC INDUSTRIAL DIRECT CO., INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.