Overview

• U.S. middle market lender's fiscal Q4 investment income fell due to lower arranger fees and base rates

• Fiscal Q4 pre-tax net investment income rose slightly from prior quarter

• Company declared regular and supplemental quarterly dividends for the period

Outlook

• Capital Southwest to pay $0.58 per share regular dividend for quarter ending June 30, 2026

• Company to pay $0.06 per share supplemental dividend in June 2026

Result Drivers

• LOWER ARRANGER FEES AND BASE RATES - Co said Q4 investment income fell mainly due to a decrease in arranger fees and lower base rates on debt investments

• REDUCED OPERATING EXPENSES - Q4 operating expenses excluding interest declined, mainly due to lower accrued bonus compensation

• CREDIT PORTFOLIO LOSSES - Net realized and unrealized losses in Q4 were driven by $7.9 mln of losses in the credit portfolio, partially offset by minor gains in equity investments

Company press release: ID:nGNX6rWtBM

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", 3 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the investment management & fund operators peer group is "buy"

• Wall Street's median 12-month price target for Capital Southwest Corp is $24.50, about 3% above its May 12 closing price of $23.78

• The stock recently traded at 11 times the next 12-month earnings vs. a P/E of 11 three months ago

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