3 Reasons We’re Fans of CSW (CSW)

September 25, 2025 at 00:01 AM EDT

CSW Cover Image

Over the last six months, CSW’s shares have sunk to $246.14, producing a disappointing 19.8% loss - a stark contrast to the S&P 500’s 14.9% gain. This was partly due to its softer quarterly results and might have investors contemplating their next move.

Following the drawdown, is this a buying opportunity for CSW? Find out in our full research report, it’s free.

Why Are We Positive On CSW?

With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ: CSW) offers special chemicals, coatings, sealants, and lubricants for various industries.

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, CSW’s 19.6% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

CSW’s EPS grew at an astounding 25.9% compounded annual growth rate over the last five years, higher than its 19.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

CSW has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 15.5% over the last five years.

CSW Trailing 12-Month Free Cash Flow Margin

Final Judgment

These are just a few reasons why we're bullish on CSW. With the recent decline, the stock trades at 24.6× forward P/E (or $246.14 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.

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