FMP
Dec 21, 2024(Last modified: Dec 23, 2024)
CSW Industrials, Inc. (NASDAQ:CSWI) is a diversified industrial growth company. It operates in three segments: Industrial Products, Specialty Chemicals, and Coatings, Sealants & Adhesives. The company focuses on providing niche, value-added products to a variety of industries. CSWI competes with other industrial and specialty chemical companies, striving to maintain efficient capital utilization.
In evaluating CSWI's financial performance, the Return on Invested Capital (ROIC) is 12.64%, while the Weighted Average Cost of Capital (WACC) is 7.91%. This results in a ROIC to WACC ratio of 1.60, indicating that CSWI is generating returns on its investments that exceed its cost of capital. This suggests effective capital management, as the company is able to create value for its shareholders.
When comparing CSWI to its peers, PC Connection, Inc. (CNXN) has a ROIC of 8.45% and a WACC of 7.35%, resulting in a ROIC to WACC ratio of 1.15. This is lower than CSWI's ratio, indicating that CSWI is more efficient in using its capital. Similarly, Equity Bancshares, Inc. (EQBK) and FRP Holdings, Inc. (FRPH) have even lower ratios of 0.17 and 0.26, respectively, further highlighting CSWI's relative efficiency.
However, Hamilton Lane Incorporated (HLNE) and Omega Flex, Inc. (OFLX) outperform CSWI in terms of capital efficiency. HLNE boasts a ROIC to WACC ratio of 3.34, the highest among the peers, with a ROIC of 32.68% and a WACC of 9.78%. OFLX follows with a ratio of 3.21, driven by a ROIC of 19.86% and a WACC of 6.18%. These figures suggest that both companies are exceptionally effective in generating returns on their invested capital.
Overall, while CSWI demonstrates solid capital management with a ROIC to WACC ratio of 1.60, it is outperformed by HLNE and OFLX. These companies exhibit superior capital utilization, generating higher returns relative to their cost of capital. This comparison underscores the importance of efficient capital management in driving shareholder value.
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