Investors Purchase High Volume of Capital Southwest Put Options (NASDAQ:CSWC)

Key Points

• Investors purchased an unusually large number of put options on CSWC — 3,523 puts, a jump of 1,040% above typical volume — signaling elevated bearish bets on the stock.
• Capital Southwest declared a monthly dividend of $0.1934 (annualized yield 10.7%), but the payout ratio is high at 128.18%, which could raise sustainability concerns.
• The firm reported quarterly EPS of $0.64 (in line with estimates) and revenue of $61.45M (beat); shares traded at $21.62 (-0.9%), and analysts hold a consensus “Moderate Buy” with a $23.42 price target.

Capital Southwest Corporation (NASDAQ:CSWC - Get Free Report) was the recipient of unusually large options trading on Friday. Investors bought 3,523 put options on the company. This represents an increase of 1,040% compared to the typical volume of 309 put options.

Capital Southwest Stock Down 0.9%

CSWC stock traded down $0.20 during trading hours on Friday, hitting $21.62. The company's stock had a trading volume of 271,724 shares, compared to its average volume of 642,697. The stock has a 50 day moving average price of $22.66 and a two-hundred day moving average price of $21.97. Capital Southwest has a 12 month low of $17.46 and a 12 month high of $23.84. The company has a market capitalization of $1.30 billion, a PE ratio of 11.95 and a beta of 0.75. The company has a quick ratio of 0.15, a current ratio of 0.15 and a debt-to-equity ratio of 0.51.

Capital Southwest (NASDAQ:CSWC - Get Free Report) last released its quarterly earnings results on Monday, February 2nd. The asset manager reported $0.64 earnings per share for the quarter, meeting analysts' consensus estimates of $0.64. The business had revenue of $61.45 million for the quarter, compared to the consensus estimate of $57.37 million. Capital Southwest had a net margin of 45.46% and a return on equity of 13.76%. During the same quarter last year, the firm earned $0.63 EPS. On average, equities research analysts expect that Capital Southwest will post 2.54 earnings per share for the current year.

Capital Southwest Dividend Announcement

The business also recently declared a monthly dividend, which will be paid on Tuesday, June 30th. Shareholders of record on Monday, June 15th will be given a $0.1934 dividend. The ex-dividend date of this dividend is Monday, June 15th. This represents a c) dividend on an annualized basis and a dividend yield of 10.7%. Capital Southwest's payout ratio is currently 128.18%.

Institutional Inflows and Outflows

A number of hedge funds have recently made changes to their positions in the stock. Triumph Capital Management acquired a new stake in Capital Southwest in the 3rd quarter worth approximately $28,000. Tower Research Capital LLC TRC grew its holdings in Capital Southwest by 13,307.1% during the second quarter. Tower Research Capital LLC TRC now owns 1,877 shares of the asset manager's stock valued at $41,000 after purchasing an additional 1,863 shares during the last quarter. State of Alaska Department of Revenue acquired a new position in Capital Southwest during the third quarter valued at approximately $48,000. Osbon Capital Management LLC acquired a new stake in shares of Capital Southwest in the fourth quarter worth $55,000. Finally, Newbridge Financial Services Group Inc. acquired a new stake in shares of Capital Southwest in the second quarter worth $70,000. Institutional investors and hedge funds own 23.42% of the company's stock.

Wall Street Analysts Forecast Growth

Several equities analysts have weighed in on CSWC shares. Zacks Research raised Capital Southwest from a "strong sell" rating to a "hold" rating in a research note on Monday, January 5th. Weiss Ratings upgraded shares of Capital Southwest from a "hold (c+)" rating to a "buy (b-)" rating in a report on Wednesday, January 28th. Six analysts have rated the stock with a Buy rating and three have given a Hold rating to the company's stock. According to data from MarketBeat.com, Capital Southwest presently has a consensus rating of "Moderate Buy" and a consensus price target of $23.42.

About Capital Southwest

Capital Southwest NASDAQ: CSWC is a publicly traded investment firm structured as a business development company (BDC) that provides customized financing solutions to middle-market companies across the United States. The firm offers a spectrum of debt and equity capital, including senior secured loans, mezzanine debt, and both preferred and common equity investments. By partnering with corporate management teams, Capital Southwest seeks to support growth initiatives, recapitalizations, acquisitions, and ownership transitions.

Founded in 1961 and headquartered in Dallas, Texas, Capital Southwest has cultivated a track record of long-term partnerships with privately held businesses and select public companies.

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