Capital Southwest Corporation (CSWC, Financial) has announced that its wholly owned subsidiary, Capital Southwest SBIC II, has been granted a license by the U.S. Small Business Administration (SBA) to function as a Small Business Investment Company (SBIC). This strategic move allows SBIC II to engage in investments under SBA regulations, which dictate various aspects such as the size and type of companies eligible for investment and the investment structures permissible.
With this SBIC license, SBIC II can now issue SBA-guaranteed debentures, a form of leverage that is contingent upon the SBA granting a leverage commitment. These SBA-backed debentures are structured as loans with interest payments due semi-annually, featuring a fixed interest rate set shortly after issuance at a spread over the ten-year U.S. Treasury Notes.
According to current SBA guidelines, SBIC II can borrow up to $175 million through these SBA-guaranteed debentures. This development significantly enhances Capital Southwest’s total borrowing capacity under the SBIC program, with the potential to leverage up to $350 million in capital.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for Capital Southwest Corp (CSWC, Financial) is $23.57 with a high estimate of $25.00 and a low estimate of $20.50. The average target implies an upside of 21.97% from the current price of $19.33. More detailed estimate data can be found on the Capital Southwest Corp (CSWC) Forecast page.
Based on the consensus recommendation from 8 brokerage firms, Capital Southwest Corp's (CSWC, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Capital Southwest Corp (CSWC, Financial) in one year is $36.95, suggesting a upside of 91.2% from the current price of $19.325. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Capital Southwest Corp (CSWC) Summary page.
