Capital Southwest (CSWC) Forms Joint Venture for Lower Middle-Market Debt Investments
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 22 2026
0mins
Should l Buy CSWC?
Source: seekingalpha
- Joint Venture Formation: Capital Southwest has formed a joint venture with another private credit asset manager, each holding a 50% equity stake, aimed at investing in high-quality first-out senior secured debt opportunities in the lower middle market, thereby enhancing competitive positioning.
- Investment Decision Structure: The joint venture's investment and operational decisions will be managed by a board with equal representation from both partners, ensuring balanced input in critical decisions and fostering effective collaboration.
- Flexible Capital Solutions: CSWC CEO Michael Sarner stated that the joint venture will provide more flexible capital solutions, allowing the company to compete for more high-quality opportunities in the lower middle market and enhance portfolio diversity.
- Stock Performance: Capital Southwest's stock rose 0.7% in after-hours trading, reflecting positive market sentiment regarding the joint venture's prospects, which may further drive the company's future investment income.
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Analyst Views on CSWC
Wall Street analysts forecast CSWC stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for CSWC is 22.13 USD with a low forecast of 21.00 USD and a high forecast of 24.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
5 Analyst Rating
2 Buy
3 Hold
0 Sell
Moderate Buy
Current: 23.010
Low
21.00
Averages
22.13
High
24.00
Current: 23.010
Low
21.00
Averages
22.13
High
24.00
About CSWC
Capital Southwest Corporation is an internally managed business development company. The Company is a market lending firm focused on supporting the acquisition and growth of middle market businesses with investments across the capital structure, including first lien, second lien and non-control equity co-investments. It specializes in providing customized debt and equity financing to lower middle market (LMM) companies in a broad range of investment segments located primarily in the United States. Its investment objective is to produce attractive risk-adjusted returns by generating current income from its debt investments and capital appreciation from its equity and equity-related investments. It invests primarily in first-lien debt securities, secured by security interests in portfolio company assets. It also invests in equity interests in its portfolio companies alongside its debt securities. It also offers managerial assistance to its portfolio companies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Capital Southwest Reports Strong Q3 2026 Earnings with New Joint Venture
- Investment Income Growth: Capital Southwest reported a pretax net investment income of $0.60 per share for Q3 2026, with total investment income reaching $61.4 million, up from $56.9 million in the prior quarter, demonstrating effective portfolio management and market adaptability.
- Dividend Stability: The Board declared a regular dividend of $0.58 per share and a supplemental dividend of $0.06 per share for the March 2026 quarter, totaling $0.64, reflecting the company's confidence in future cash flows and commitment to returning value to shareholders.
- New Joint Venture Launch: The company established a new first-out senior loan joint venture with a private credit asset manager, expected to enhance competitiveness in the core lower middle market and generate low to mid-teens equity returns once fully ramped, marking a significant strategic shift for the company.
- Portfolio Expansion: The company committed $244 million across 8 new and 16 existing portfolio companies, with total assets growing to $1.8 billion, a 19% year-over-year increase, indicating the company's proactive expansion and growth potential in the market.
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- Net Asset Value Increase: The net asset value per share rose to $16.75 in Q3 from $16.62 in the previous quarter, reflecting improved asset quality and enhanced investment returns, which further bolsters investor confidence.
- Record New Commitments: The company originated $244 million in new commitments during the quarter, including $199.4 million in eight new portfolio companies, showcasing its proactive strategy in expanding its investment portfolio and capitalizing on market opportunities.
- Asset Operations Earnings: The net increase in net assets from operations reached $32.9 million in Q4, up from $25.6 million in Q2, demonstrating ongoing improvements in asset management and investment returns, thereby enhancing its future growth potential.
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- Net Investment Income Performance: Pre-tax net investment income stood at $34.6 million, translating to $0.60 per weighted average common share, reflecting the company's stability in income generation, which helps bolster investor confidence.
- Portfolio Scale: As of the reporting date, the total investment portfolio reached $2.0 billion, with a credit portfolio of $1.8 billion, 99% of which consists of first lien senior secured debt, showcasing the company's strategic choices in risk management and yield acquisition.
- New Investment Commitments: The company made $241.4 million in new committed credit investments during the quarter, demonstrating a proactive approach to seizing market opportunities, while current non-accruals have a fair value of $29.2 million, representing 1.5% of the total investment portfolio, reflecting a degree of risk management capability.
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- Additional Earnings Releases: In addition to the aforementioned companies, others like ASH, DOC, DVA, FN, MTG, NJR, RMBS, TWO, and WWD will also report earnings after the market closes on Monday, making it crucial for investors to monitor these performance metrics closely.
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- Earnings Season Calendar: Seeking Alpha has provided a comprehensive earnings season calendar, assisting investors in staying informed about the timing of various companies' earnings releases to make more informed investment decisions.
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- Earnings Estimate Fluctuations: Over the past three months, EPS estimates have seen two upward revisions and two downward revisions, reflecting mixed analyst views on the company's profitability, which could impact investor confidence.
- Revenue Estimate Adjustments: Revenue estimates have experienced four upward revisions and one downward revision, suggesting a generally optimistic sentiment in the market regarding Capital Southwest's future revenue growth, potentially attracting more investor attention.
- Preliminary Income Data: Capital Southwest has provided preliminary figures for FQ3 net investment income, further enhancing market assessments of its financial health, although overall market sentiment remains cautious.
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- Investment Income Growth: Capital Southwest reported a pretax net investment income of $0.60 per share for Q3 2026, with total investment income reaching $61.4 million, up from $56.9 million in the prior quarter, demonstrating effective portfolio management and market adaptability.
- Dividend Stability: The Board declared a regular dividend of $0.58 per share and a supplemental dividend of $0.06 per share for the March 2026 quarter, totaling $0.64, reflecting the company's confidence in future cash flows and commitment to returning value to shareholders.
- New Joint Venture Launch: The company established a new first-out senior loan joint venture with a private credit asset manager, expected to enhance competitiveness in the core lower middle market and generate low to mid-teens equity returns once fully ramped, marking a significant strategic shift for the company.
- Portfolio Expansion: The company committed $244 million across 8 new and 16 existing portfolio companies, with total assets growing to $1.8 billion, a 19% year-over-year increase, indicating the company's proactive expansion and growth potential in the market.
See More
Capital Southwest Reports Strong Q3 Earnings Performance
- Investment Income Growth: Capital Southwest reported total investment income of $61.5 million for Q3, exceeding the average analyst estimate of $57.9 million and rising from $56.9 million in the previous quarter, indicating effective portfolio management and a recovering market demand.
- Net Asset Value Increase: The net asset value per share rose to $16.75 in Q3 from $16.62 in the previous quarter, reflecting improved asset quality and enhanced investment returns, which further bolsters investor confidence.
- Record New Commitments: The company originated $244 million in new commitments during the quarter, including $199.4 million in eight new portfolio companies, showcasing its proactive strategy in expanding its investment portfolio and capitalizing on market opportunities.
- Asset Operations Earnings: The net increase in net assets from operations reached $32.9 million in Q4, up from $25.6 million in Q2, demonstrating ongoing improvements in asset management and investment returns, thereby enhancing its future growth potential.
See More
Capital Southwest Reports Q3 Investment Income Growth
- Investment Income Growth: Capital Southwest reported total investment income of $61.4 million in Q3, an 8.2% increase from $56.9 million in the previous quarter, indicating effective portfolio management and a rebound in market demand.
- Net Investment Income Performance: Pre-tax net investment income stood at $34.6 million, translating to $0.60 per weighted average common share, reflecting the company's stability in income generation, which helps bolster investor confidence.
- Portfolio Scale: As of the reporting date, the total investment portfolio reached $2.0 billion, with a credit portfolio of $1.8 billion, 99% of which consists of first lien senior secured debt, showcasing the company's strategic choices in risk management and yield acquisition.
- New Investment Commitments: The company made $241.4 million in new committed credit investments during the quarter, demonstrating a proactive approach to seizing market opportunities, while current non-accruals have a fair value of $29.2 million, representing 1.5% of the total investment portfolio, reflecting a degree of risk management capability.
See More
Major Earnings Reports Expected After Monday's Close
- Major Earnings Preview: After Monday's close, companies such as Palantir Technologies, Simon Property Group, NXP Semiconductors, Capital Southwest Corporation, and Teradyne are set to release their earnings reports, with market participants keenly anticipating the potential impact on stock prices.
- Additional Earnings Releases: In addition to the aforementioned companies, others like ASH, DOC, DVA, FN, MTG, NJR, RMBS, TWO, and WWD will also report earnings after the market closes on Monday, making it crucial for investors to monitor these performance metrics closely.
- Market Reaction Expectations: The market is generally expecting these earnings reports to significantly influence the stock prices of the respective companies, particularly in the current economic climate where investor focus on corporate profitability remains heightened.
- Earnings Season Calendar: Seeking Alpha has provided a comprehensive earnings season calendar, assisting investors in staying informed about the timing of various companies' earnings releases to make more informed investment decisions.
See More
Capital Southwest to Announce FQ3 Earnings on February 2nd
- Earnings Announcement Schedule: Capital Southwest is set to release its FQ3 earnings on February 2nd after market close, with consensus EPS estimate at $0.60 and revenue estimate at $57.88 million, indicating investor interest in the company's financial performance.
- Earnings Estimate Fluctuations: Over the past three months, EPS estimates have seen two upward revisions and two downward revisions, reflecting mixed analyst views on the company's profitability, which could impact investor confidence.
- Revenue Estimate Adjustments: Revenue estimates have experienced four upward revisions and one downward revision, suggesting a generally optimistic sentiment in the market regarding Capital Southwest's future revenue growth, potentially attracting more investor attention.
- Preliminary Income Data: Capital Southwest has provided preliminary figures for FQ3 net investment income, further enhancing market assessments of its financial health, although overall market sentiment remains cautious.
See More
Southwest Airlines Ends Open Seating Policy
- Policy Shift: Southwest Airlines has officially ended its open seating policy, which has been in place for over 54 years, in favor of assigned seating to enhance customer satisfaction and increase revenue, with projections of over $4 billion in earnings before interest and taxes.
- Customer Reactions: While 80% of customers prefer assigned seating, some loyal passengers express disappointment, feeling that the airline has lost its uniqueness, which could lead to potential customer attrition.
- Market Competition: This policy change aligns with consumer demand for certainty in seating, as Southwest aims to enhance its market share by adopting industry standards, especially after expanding its network to Hawaii and Costa Rica.
- Financial Outlook: Southwest anticipates a tripling of earnings per share to $3.19 in 2026, driven in part by the new seating policy, reflecting the company's optimistic outlook on future financial performance.
See More
