CSW INDUSTRIALS, INC. (CSW): what the price assumes

In the published model solve dated 2026-Q2, anchored at $308.46, CSW INDUSTRIALS, INC. (CSW) is priced for today's economics sustained for ~5.9 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/CSW

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 10: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.1% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

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.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.

Per-Model Detail (n=11)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• A single acquisition reshaped the balance sheet: MARS Parts was bought for an aggregate purchase price of 658.1 million dollars, financed partly with a new term loan, and long-term borrowings stood at 839.8 million dollars at March 31, 2026 against none a year earlier.
• The products are the kind contractors specify without shopping around, and the 10-K puts it in its own words: HVAC/R contractors ask for our products by name, and the professional trades have been using our industry-leading solutions for generations.
• The multiple sits at the very top of the peer group's range while the operating margin, about 16.4%, is mid-pack, and fiscal first-quarter results land on July 30, 2026.

Bull Case

Read the stage before reading the multiple. CSW is a roll-up partway through a build, and trailing figures describe a company that has already changed underneath them. MARS Parts, bought for an aggregate purchase price of 658.1 million dollars, contributed 60.1 million dollars of net revenue and 3.9 million dollars of pre-tax income in its stub period to March 31, 2026, and that figure includes the expenses of integrating it. A twelve-month profit number that contains a few months of the largest business the company has ever bought is not measuring the business anyone is actually buying today.

What it acquires is unusually good raw material. The Contractor Solutions segment sells the small, specified consumables that HVAC and plumbing trades reach for without deliberating: condensate switches, sealants, leak stoppers, air distribution products, under brands like RectorSeal, TRUaire, Safe-T-Switch and Leak Freeze. The 10-K describes the demand pattern directly, noting that HVAC/R contractors ask for our products by name, and the professional trades have been using our industry-leading solutions for generations. The economics follow from the ticket size. A twenty-dollar part that prevents a callback on a nine-thousand-dollar installation does not get price-shopped, which is how a manufacturer of unglamorous components ends up with margins closer to a specialty chemicals company than to a fabricator.

The acquisition record shows a repeatable process rather than a single swing. Alongside MARS Parts the filing records Aspen Manufacturing at 327.6 million dollars, PSP Products at 51.3 million, PF WaterWorks at 45.8 million, Dust Free at 34.2 million and Hydrotex at 17.0 million. These are family-scale businesses in Texas, Virginia and New York with strong niche positions and no independent path to national distribution. Bolting them onto an established contractor sales channel is the value creation, and the fact that the targets keep appearing suggests the supply of them has not run out.

Against its cohort the profitability holds up in the middle of a strong field. CSW converts about 16.4% of revenue into operating profit, ahead of AAON at 10.4%, FBIN at 10.8% and IOSP at 6.9%, if behind the best in class. The most recent quarter was a record on both revenue and profit and beat the consensus estimate by a wide margin. The bull case does not need the multiple to expand. It needs the acquired businesses to reach the margins of the ones already inside the company, at which point the trailing arithmetic that currently looks expensive starts describing a different denominator.

Bear Case

The variable with the most leverage on this thesis used to be construction activity. As of this year it is the cost of borrowing, and the change happened fast. Long-term debt stood at 839.8 million dollars at March 31, 2026 against nil twelve months earlier, after the company established a revolving facility of up to 700 million dollars and a senior secured term loan of up to 600 million, both maturing on November 4, 2030. Net debt now runs about 5.28 times operating profit, and liquid assets amount to roughly 33.8 million dollars. A year ago this was a debt-free industrial with optionality. Today it is a leveraged acquirer with a refinancing date, and the price has not been marked down for the difference.

The valuation is where that matters. At today's level the market pays roughly 36 times what the company earns before interest and tax, a multiple sitting at the very top of its peer distribution and well beyond the upper quartile. The requirement behind it is operating profit compounding at the fastest rate the business could fund internally, sustained for about seven years. Only about 23% of comparable fast growers held that pace that long. And the profitability supporting the premium is not itself premium: at about 16.4% operating margin, CSW sits below AWI at 25.9%, HAYW at 21.1%, ALLE at 20.6%, WMS at 20.3% and CSL at 20.1%. Top multiple, middle margin, is an awkward combination to defend.

The growth has also been bought rather than generated. Share count has risen about 1.2% a year over four years, and the borrowing funded the rest. That is a legitimate strategy with a specific vulnerability: it depends on a continuing supply of well-priced targets and on the debt markets staying open at rates the acquired earnings can service. The filing's own liquidity language commits only to the next twelve months, which is standard, and the maturity wall in 2030 is far enough away to be manageable. What is not manageable is a period where deal prices stay high and financing gets more expensive at the same time, which is precisely the environment a rate-sensitive building-products cycle produces.

Competition is the quieter risk and the filing names it plainly, warning of significant competition from both large domestic and international competitors and from smaller regional competitors who may improve their competitive position in our served markets by successfully introducing new or substitute products. Brand loyalty among trades is real, but it protects a product line, not a company. Each acquisition brings a new set of niches that have to be defended individually, and the specification advantage that makes an existing brand safe does not transfer automatically to a business bought last year.

Every method that values this company on what it currently earns or currently owns lands far below the market price. The shares sit about 268% above where the asset-value approaches settle, and further still above the earnings-power ones, which are held down by a year of heavy spending. Only forward-growth projection reaches today's price. That is a defensible pattern for a genuine compounder. It is also exactly the pattern a stock displays shortly before the compounding is tested, and the test here arrives with 839.8 million dollars of borrowings attached to it.

Valuation

Thirty-six times operating income is the headline, and the first job is to work out how much of it is real. At $289.00 the market pays roughly that multiple on what the whole company earns before interest and tax, which inverts into a requirement of operating profit growing at the ceiling the business can fund from its own cash flow, held there for about seven years. Treat the figure as approximate; it is a single solve under fixed assumptions. What is not approximate is the base rate behind it: roughly 23% of comparable fast growers sustained that pace for that long, and each additional percentage point of growth shortens the required runway by about 1.9 years.

Part of the multiple is timing rather than expense. The trailing profit does not contain a full year of the businesses acquired during the fiscal year ended March 2026, and the filing quantifies the gap: MARS Parts contributed 60.1 million dollars of revenue and 3.9 million dollars of pre-tax income in its stub period, against an aggregate purchase price of 658.1 million dollars. A full year of that revenue at segment-level profitability changes the denominator meaningfully. The point cuts both ways. The capital has been spent; the earnings from it have not yet arrived, and the interval between those two events is where acquisition strategies are usually judged.

The methods themselves are unanimous in one direction. Asset value, earnings power and peer comparison all land far below the current price, with the shares sitting roughly 268% above where the asset-value approaches settle. Only the forward-growth approaches reach today's level, and they reach it by projecting the recent historical growth rate forward for seven years. When a single family of methods carries the entire price, the investment question narrows to whether that family's assumption survives contact with the next few years.

The peer group frames the premium precisely. The multiple sits at the very top of the peer distribution, well beyond the upper quartile, while the operating margin of about 16.4% sits in the middle: AWI runs 25.9%, HAYW 21.1%, ALLE 20.6% and CSL 20.1%. A premium multiple on a mid-pack margin is a bet that the margin converges upward toward the leaders as acquisitions integrate, rather than a reflection of superior current economics.

Solvency has become a live part of the picture rather than a formality. Net debt now sits at about 5.28 times operating profit, liquid assets are around 33.8 million dollars, and the share count has grown roughly 1.2% a year over the past four years rather than shrinking. The financing is termed out to November 2030 and the operating businesses generate cash, so nothing is precarious. But a company that was debt-free a year ago now carries a capital structure that participates in the outcome, and the price being paid for the equity still reflects the balance sheet it used to have.

Catalysts

The next print, covering the June quarter, is scheduled for July 30, 2026, the first report of fiscal 2027. It follows a fourth quarter reported on May 26, 2026 that the company described as a record for both the quarter and the full year, with Q4 FY2026 earnings per share of $3.14 against a consensus of $2.34 and quarterly revenue of about $309 million against roughly $299 million expected. Two consecutive beats of that size usually mean the acquired revenue is landing ahead of the modelling rather than that the base business has accelerated, which makes the segment detail more informative than the headline.

The item to track through the next several reports is the integration of MARS Parts. The filing notes that the company incurred 3.5 million dollars of transaction expenses on the acquisition and moved quickly to fold the business into the Contractor Solutions segment. A deal of that size relative to the company has to show up as segment margin over the coming year, and the first clean quarter of full ownership is the earliest place it can appear.

Capital return continues at a modest scale alongside all of this. The board declared a quarterly dividend of $0.30 per share on July 17, 2026, which is a small distribution relative to the cash being committed to acquisitions and consistent with a company still choosing to buy growth rather than pay it out. On the sell side, Truist raised its target in early July while keeping a Hold rating, the standard signal that estimates are moving up faster than the analyst's comfort with the valuation.

Peer Cohorts (Per Segment, With Filing Citations)

Contractor Solutions (reported)

• AAON (AAON, INC.)
• FY2025 10-K: …Gary D. Fields Customer Exploration Center. The NAIC is a world-class research and development laboratory accredited by the Air Movement and Control Association International, Inc. ("AMCA"), where our products are continuously tested under extreme environmental conditions to ensure optimal performance, efficiency,…
• FY2025 10-K: …plc), York Light Commercial (Bosch Home Comfort Group), Johnson Controls (Johnson Controls International PLC), Carrier (Carrier Global Corporation), and Daikin (Daikin Industries). Our thermal management products primarily compete with Vertiv (Vertiv Holdings Co.), STULZ (STULZ Air Technology Systems, Inc.), Munters,…
• AWI (ARMSTRONG WORLD INDUSTRIES, INC.)
• FY2025 10-K: …taking into account the time-lag effect, provide a reasonable indication of our future revenue opportunity from commercial renovation and new construction. Additionally, we believe that customer preferences for product type, style, color, performance attributes (such as acoustics, energy efficiency, sustainability…
• FY2025 10-K: …timing of revenues and cash flows are affected by economic factors. Net sales by major customer channel are as follows: Distributors - represents net sales to commercial building materials distributors who re-sell our products to contractors, subcontractors' alliances, large architect and design firms, and major…
• FBIN (Fortune Brands Innovations, Inc.)
• FY2025 10-K: Segment Raw Materials Water Brass, zinc, resins, stainless steel and aluminum Outdoors Wood, aluminum, steel, plastics, resins, glass, vinyl and insulating foam Security Steel, zinc, brass and resins Intellectual property. Product innovation and branding are important to the success of our business. In addition to the…
• FY2025 10-K: …centers and mass merchandisers. This segment is increasingly investing in and developing digital products and "smart" home capabilities. In aggregate, sales to The Home Depot and Lowe's comprised approximately 21% of net sales of the Water segment in 2025. This segment's chief competitors include Masco, Kohler, LIXIL…
• AOS (A. O. Smith Corporation)
• FY2025 10-K: …lines of residential and commercial gas and electric water heaters, boilers, heat pumps, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. Our Rest of World segment is primarily comprised of China, India, and Europe. NORTH AMERICA Sales in our…
• FY2025 10-K: …years . The addition of the acquired company expanded the Company's water treatment footprint in North America. The acquired company is included in the North America segment. 2023 Acquisitions During the third quarter of 2023, the Company acquired a privately-held water treatment company. The Company paid an…
• WMS (ADVANCED DRAINAGE SYSTEMS, INC.)
• FY2025 10-K: …solution for our clients and customers with this combination forming a key strategy in our sales growth, profitability and market share penetration. The practice of selling a drainage system is attractive to both distributors and end users, by providing a broad package of products that can be sold on individual…
• FY2025 10-K: …and related products to be sold in their respective regional markets. We also have wholly-owned subsidiaries that distribute our pipe and related products in Europe and the Middle East. Combining local partners' customer relationships, brand recognition and local management talent, with our world-class manufacturing…
• ZWS (ZURN ELKAY WATER SOLUTIONS CORPORATION)
• FY2025 10-K: …The demand for our products is primarily driven by new institutional and commercial building construction, the retrofit of existing structures (to make them more energy and water efficient) and, to a lesser extent, new waterworks and residential construction. Our products are principally specification-driven given…
• FY2025 10-K: …warranty that the product will conform to agreed-upon specifications, there are generally no other significant post-shipment obligations. The expected costs associated with standard warranties continues to be recognized as an expense when the products are sold. When the contract provides the customer the right to…
• HAYW (Hayward Holdings, Inc.)
• FY2025 10-K: …in the United States. Customer shipments in Europe are fulfilled through our distribution centers in France or Spain, and Australia is served primarily through third-party distribution. The remaining countries in this segment are predominantly served through U.S.-based regional managers who work with established…
• FY2025 10-K: …through a variety of channels to a diverse global customer base. The majority of our sales are made through distributors, who in turn sell to thousands of pool builders and servicers. The remaining sales are made directly to large retailers, pool builders and buying groups. Our two largest customers represented…

Specialized Reliability Solutions (reported)

• NGVT (INGEVITY CORPORATION)
• FY2025 10-K: …the markings can be designed for varying levels of initial and retained performance properties. Customers We supply our road markings products to approximately 200 customers in North America through our own direct sales force. In 2025, our ten largest customers accounted for approximately 59 percent of the product…
• FY2025 10-K: …which could have a material adverse effect on our competitive position, business, financial condition, results of operations, and cash flows. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 1C. CYBERSECURITY At Ingevity, we understand that strong cybersecurity is essential to protecting sensitive information and…
• IOSP (INNOSPEC INC.)
• FY2025 10-K: …The segment has grown organically through our development of new products to address increased demand for fuel, focus on fuel economy, compatibility of renewable fuels, higher efficiency engine technologies and legislative developments, including tightening global emissions regulations. We are also 2 applying these…
• FY2025 10-K: …fuel efficiency, boost engine performance and reduce harmful emissions. Our Oilfield Services business supplies chemicals for drilling, completion, production and drag reducing agents ("DRA") which make oil and gas exploration and production more cost-efficient and environmentally friendly. Segment Information The…
• FUL (FULLER H B CO)
• FY2025 10-K: …facilities to perform their jobs and this continues to enhance connections across the Company, as well as with customers and external partners. This supports our desire to be first and fastest in finding solutions for customers and improving our overall effectiveness. Finally, we continue to take great pride in our…
• FY2025 10-K: …new high-performance solutions that enable customers to improve their products and processes to better achieve their sustainability programs. Regulatory Compliance The Company is subject to various federal, state, local and foreign laws and regulations relating to environmental protection and workers' safety,…
• RPM (RPM International Inc.)
• FY2025 10-K: …country:US 2025-05-31 0000110621 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MutualFundMember country:US 2025-05-31 0000110621 us-gaap:OperatingSegmentsMember rpm:SpecialtyProductsGroupSegmentMember srt:AsiaPacificMember us-gaap:NonUsMember 2023-06-01 2024-05-31 0000110621…
• FY2025 10-K: …Accounts Receivable Securitization Program The accounts receivable securitization facility (the "AR Program"), which was initially entered in on May 9, 2014 and subsequently amended on multiple dates, was amended on April 30, 2025. This amendment extended the facility termination date to April 30, 2028 and changed…
• WDFC (WD-40 COMPANY)
• FY2025 10-K: …We are a meritocracy with a competitive performance-based total rewards strategy, where compensation and career advancement are determined by demonstrated competencies and contributions. Our calendar year 2023 global pay equity study reaffirmed there were not statistically significant or systemic gender-based pay…
• FY2025 10-K: …equity incentive plans. Stock-based Compensation The Company accounts for stock-based equity awards exchanged for employee and nonemployee director services in accordance with the authoritative guidance for share-based payments. Stock-based equity awards are measured at the F-15 Table of Contents estimated grant date…

Engineered Building Solutions (reported)

• ALLE (Allegion plc)
• FY2025 10-K: …with a strong channel network. We compete based on the breadth, innovation and quality of our products and solutions, pricing, our ability to custom-configure solutions to meet individual end-user requirements and our global supply chain. Customers We sell most of our products and solutions through distribution and…
• FY2025 10-K: …Engagement surveys provide a mechanism to gather direct employee feedback, give team leaders insights on potential areas of focus, and allow leaders to prioritize and act on their teams' foundational, inclusion, growth and development needs. Strengths-based leadership is an element of our commitment to inclusion: the…
• AWI (ARMSTRONG WORLD INDUSTRIES, INC.)
• FY2025 10-K: …customer demand for building products that align with their sustainability goals. These efforts also include our mineral fiber ceilings recycling program, which aims to divert reclaimed ceiling tiles from landfills. We expect that there will be increased demand over time for products, systems and services that meet…
• FY2025 10-K: …taking into account the time-lag effect, provide a reasonable indication of our future revenue opportunity from commercial renovation and new construction. Additionally, we believe that customer preferences for product type, style, color, performance attributes (such as acoustics, energy efficiency, sustainability…
• GFF (GFF)
• FY2025 10-K: …by our competitors, (ii) concern on the part of current or potential customers, (iii) loss of business opportunities, or (iv) difficulties in attracting and retaining qualified personnel and business partners. Activist campaigns may also cause significant fluctuations in our stock price based on temporary or…
• FY2025 10-K: …Products Manufacturing 253,000 Owned Mountain Top, PA Home and Building Products Manufacturing 279,000 Owned Mason, OH Home and Building Products Office 131,000 Owned Goodyear, AZ Home and Building Products Manufacturing 163,000 Owned Greenville, OH Home and Building Products Distribution 148,000 Leased 2027 Ocala,…
• CSL (CARLISLE COMPANIES INCORPORATED)
• FY2025 10-K: …beyond production areas, as COS drives new product innovation, engineering, supply chain management, warranty and product rationalization. As demand accelerates for energy-efficient solutions for the sustainable buildings of the future, we will continue to emphasize the development of energy-efficient products,…
• FY2025 10-K: …customers represented 33% of the Company's consolidated revenues. The loss of either of these customers could have a material adverse effect on the Company's consolidated revenues and operating income. Both of these customers' business is covered under a number of independent local agreements. Demand for CCM's…

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.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• 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.