Capital Southwest (NASDAQ:CSWC) Shares Break Above 200-Day Moving Average - Should You Sell?

Key Points

• Capital Southwest shares moved above their 200-day moving average, reaching $23.45 and last trading at $23.41, close to the $23.40 technical level.
• Analyst sentiment remains favorable, with six Buy ratings and two Holds producing a consensus “Moderate Buy” rating and an average price target of $24.10.
• The company reported quarterly EPS of $0.58, beating estimates, and declared a monthly dividend of $0.1934, equivalent to an annualized yield of approximately 9.9%; however, its payout ratio is high at 128.18%.

Capital Southwest Corporation (NASDAQ:CSWC - Get Free Report)'s share price passed above its two hundred day moving average during trading on Thursday. The stock has a two hundred day moving average of $23.40 and traded as high as $23.45. Capital Southwest shares last traded at $23.41, with a volume of 307,066 shares changing hands.

Wall Street Analyst Weigh In

A number of research analysts have recently weighed in on CSWC shares. B. Riley Financial raised their price target on Capital Southwest from $24.50 to $25.50 and gave the company a "buy" rating in a research report on Wednesday, August 5th. Weiss Ratings lowered shares of Capital Southwest from a "buy (b)" rating to a "buy (b-)" rating in a research report on Tuesday, October 13th. Citizens Jmp boosted their price objective on shares of Capital Southwest from $25.00 to $26.00 and gave the stock a "market outperform" rating in a research report on Wednesday, August 5th. UBS Group increased their price objective on shares of Capital Southwest from $23.50 to $24.00 and gave the company a "neutral" rating in a research note on Friday, October 9th. Finally, Citigroup restated a "market outperform" rating on shares of Capital Southwest in a report on Wednesday, August 5th. Six research analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the stock. According to data from MarketBeat, Capital Southwest has a consensus rating of "Moderate Buy" and an average price target of $24.10.

Capital Southwest Stock Performance

The company has a current ratio of 0.17, a quick ratio of 0.17 and a debt-to-equity ratio of 0.62. The firm has a market capitalization of $1.49 billion, a PE ratio of 12.93 and a beta of 0.71. The stock's 50 day moving average price is $23.75 and its two-hundred day moving average price is $23.40.

Capital Southwest (NASDAQ:CSWC - Get Free Report) last posted its earnings results on Monday, August 3rd. The asset manager reported $0.58 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.56 by $0.02. The firm had revenue of $61.05 million for the quarter, compared to analyst estimates of $61.22 million. Capital Southwest had a return on equity of 13.88% and a net margin of 46.68%. During the same quarter in the prior year, the company earned $0.61 EPS. On average, equities analysts expect that Capital Southwest Corporation will post 2.27 earnings per share for the current year.

Capital Southwest Dividend Announcement

The business also recently declared a monthly dividend, which will be paid on Thursday, December 31st. Stockholders of record on Tuesday, December 15th will be issued a $0.1934 dividend. This represents a $2.32 dividend on an annualized basis and a dividend yield of 9.9%. The ex-dividend date of this dividend is Tuesday, December 15th. Capital Southwest's payout ratio is 128.18%.

Insider Buying and Selling at Capital Southwest

In related news, Director William Thomas, III acquired 2,170 shares of Capital Southwest stock in a transaction dated Thursday, October 1st. The shares were acquired at an average cost of $23.04 per share, for a total transaction of $49,996.80. Following the completion of the transaction, the director directly owned 22,842 shares of the company's stock, valued at $526,279.68. The trade was a 10.50% increase in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available through this hyperlink. 2.70% of the stock is currently owned by company insiders.

Institutional Trading of Capital Southwest

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Van ECK Associates Corp boosted its stake in shares of Capital Southwest by 35.4% during the 2nd quarter. Van ECK Associates Corp now owns 1,526,667 shares of the asset manager's stock worth $36,289,000 after purchasing an additional 399,106 shares during the last quarter. Sound Income Strategies LLC grew its holdings in shares of Capital Southwest by 2.0% during the first quarter. Sound Income Strategies LLC now owns 903,329 shares of the asset manager's stock worth $19,810,000 after buying an additional 17,362 shares in the last quarter. Empowered Funds LLC purchased a new stake in shares of Capital Southwest during the first quarter worth about $13,694,000. Empirical Finance LLC purchased a new stake in shares of Capital Southwest during the first quarter worth about $13,689,000. Finally, Legal & General Group Plc acquired a new position in shares of Capital Southwest in the second quarter valued at approximately $11,886,000. Hedge funds and other institutional investors own 23.42% of the company's stock.

Capital Southwest Company Profile

Capital Southwest Corporation NASDAQ: CSWC is a business development company that provides financing to middle-market and lower-middle-market businesses in the United States. The company primarily invests in privately held companies that may require capital to support growth, acquisitions, recapitalizations, ownership transitions, or other strategic initiatives.

Its investment portfolio generally consists of senior secured loans, including first-lien and second-lien debt, as well as subordinated debt and equity investments.

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