One-glance verdict
Undervalued
$57.63 our estimate vs market $48.03
Wall Street consensus: $60.60 (5.2% higher than our fair-value estimate)
17% below our estimate, below the bear case
Fundamentals snapshot
Core & Main, Inc.
CNM · NYQ · Industrials · Industrial Distribution
Current price
$48.03
52-week range
$43.96 - $67.18
Market cap
$9.30B
Balance sheet
Stretched
6.02x Adequate
Net debt $2.30B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Returns 23.9% on equity, ahead of 40% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Net debt grew 52.2% over 3 years.
- Risk Stock trades 2.8% above its 5-year average P/E.
What this company does
Core & Main, Inc.
Core & Main is a key U.S. distributor of essential products for water systems, selling items like pipes, valves, and fire hydrants to cities and professional contractors. Most of its business comes from the constant need to repair and upgrade aging infrastructure, which is important because it creates steady demand for its products. This work provides a reliable stream of recurring revenue (income a company can reasonably expect to receive on a regular basis), since maintaining public water systems is a non-stop necessity for communities.
How the company got here
Core & Main's roots trace back to a division within The Home Depot called HD Supply Waterworks. In 2017, a private equity firm (a company that invests in businesses) named Clayton, Dubilier & Rice bought this division and established it as an independent company, renaming it Core & Main. This move allowed the company to focus entirely on the specialized market of water infrastructure. Since becoming independent, Core & Main has grown significantly by acquiring smaller, local distributors and became a publicly traded company in 2021.
What it actually does
Think of Core & Main as a specialized superstore for the massive, mostly unseen network of pipes and products that control water in our communities. They don't manufacture the products themselves, but act as a critical link, called a distributor, between thousands of suppliers and the contractors and local governments who build and maintain our water systems. They supply everything from the huge pipes that carry drinking water to your house, to fire hydrants, storm drains that prevent flooding, and even smart meters that measure water usage. Their customers are the professionals who do the hands-on work of repairing, replacing, and building the infrastructure for water, wastewater, and fire protection.
Pipes, Valves & Fittings
This is the company's largest and most foundational business, making up the majority of its sales. It involves supplying the essential components for moving water, like pipes of all sizes, valves that control the flow, and the countless fittings that connect everything together. Municipalities (your local city or town) and private water companies pay for these products to maintain and upgrade the vast underground networks that provide clean drinking water and manage wastewater. When a water main breaks or a new neighborhood is built, the necessary parts likely come from a distributor like Core & Main.
Storm Drainage
This segment focuses on products that manage rainwater and prevent flooding, accounting for a significant portion of the company's business. This includes large pipes, drains, and specialized materials that are used to build systems for detaining and diverting stormwater runoff from roads, parking lots, and developments. The customers are typically contractors working on construction projects for both public and private entities who need to ensure proper drainage to protect property and the environment.
Fire Protection
A smaller but vital part of the business, this segment provides the specialized equipment used to extinguish fires inside buildings. This includes pipes, sprinkler heads, valves, and fittings that make up the fire sprinkler systems required in commercial and many residential buildings. Professional fire protection contractors purchase these materials from Core & Main to install and service these life-saving systems.
Meters
This segment provides the devices that measure and regulate water usage, which is a growing part of the business. It includes not just the physical water meters but also advanced "smart" metering technology that allows for remote reading and better water management for utilities. Municipalities and private water companies are the primary customers, buying these products to accurately bill customers and monitor the water system for leaks and inefficiencies.
What management is betting on now
Management's strategy focuses on growing by acquiring smaller, local distributors in what they see as a very fragmented market (an industry with many small, independent players). They are also focused on expanding their geographic footprint by opening new branch locations in attractive markets. The company believes there is a huge, long-term need to repair and upgrade the aging water infrastructure in the United States, and they are positioning themselves as the go-to supplier for these essential projects. They are also investing in their own technology to make their supply chain (the process of getting products from the manufacturer to the customer) more efficient and to improve the customer experience.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q2
$39.00M
FY2025 Q3
$252.00M
FY2025 Q4
$224.00M
FY2026 Q1
$64.00M
FY2026 Q2
$24.00M
FY2026 Q3
$263.00M
FY2026 Q4
$253.00M
FY2027 Q1
$68.00M
Revenue
$1.91B
Net income
$108.00M
Diluted EPS
0.57
Operating cash flow
$82.00M
Free cash flow
$68.00M
Fetching…
Sources
Revenue
$1.58B
Net income
$70.00M
Diluted EPS
0.37
Operating cash flow
$268.00M
Free cash flow
$253.00M
Fetching…
Sources
Revenue
$2.06B
Net income
$137.00M
Diluted EPS
0.72
Operating cash flow
$271.00M
Free cash flow
$263.00M
Fetching…
Sources
Revenue
$2.09B
Net income
$134.00M
Diluted EPS
0.70
Operating cash flow
$34.00M
Free cash flow
$24.00M
Fetching…
Sources
Revenue
$1.91B
Net income
$100.00M
Diluted EPS
0.52
Operating cash flow
$77.00M
Free cash flow
$64.00M
Fetching…
Sources
Revenue
$1.70B
Net income
$64.00M
Diluted EPS
0.34
Operating cash flow
$235.00M
Free cash flow
$224.00M
Fetching…
Sources
Revenue
$2.04B
Net income
$133.00M
Diluted EPS
0.69
Operating cash flow
$260.00M
Free cash flow
$252.00M
Fetching…
Sources
Revenue
$1.96B
Net income
$119.00M
Diluted EPS
0.61
Operating cash flow
$48.00M
Free cash flow
$39.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $57.63 vs current price $48.03
Wall Street consensus is the average analyst price target: $60.60 (5.2% higher than our fair-value estimate).
Our most-likely fair value is $57.63 a share — about 20.0% above today's price of $48.03, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $2.3B. Interest coverage 6.0x.
Net debt
$2.30B
Interest coverage
6.02x
Core & Main, Inc.'s profit covers its interest bill about 6.0 times over.
Stretched
Worse cushion
Baseline
Better cushion
CNM
BASELINE
Core & Main, Inc.
Total debt $2.45B Interest coverage 6.02x This is the baseline the peer rows are being compared against.
Total debt $6.08B Interest coverage 14.14x +135% vs CNM Carries about 2.3x more debt cushion than CNM.
Total debt $486.23M Interest coverage 140.77x +2,240% vs CNM Carries about 23.4x more debt cushion than CNM.
Total debt $2.78B Interest coverage 30.80x +412% vs CNM Carries about 5.1x more debt cushion than CNM.
Total debt $445.50M Interest coverage 267.05x +4,338% vs CNM Carries about 44.4x more debt cushion than CNM.
Total debt $6.51B Interest coverage 3.19x -47% vs CNM Carries about 1.9x less debt cushion than CNM.
What you should know
The case for and against CNM
3 Rewards
3 Risks
Rewards
-
Returns 23.9% on equity, ahead of 40% of its peers.
-
Free cash flow was positive in 4/10 years.
-
Trades at 20.4x P/E vs peer median 32.1x (36.7% cheaper).
Risks
-
Net debt grew 52.2% over 3 years.
-
Stock trades 2.8% above its 5-year average P/E.
-
Operating margin compressed from 11.7% to 9.3% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
20.35x
Forward P/E
15.60x
P/B
4.42x
P/S
1.22x
EV/EBITDA
12.28x
PEG ratio
1.46x
Profitability
How much profit each dollar creates
Gross margin
27.1%
Operating margin
9.3%
Net margin
5.9%
ROE
23.9%
ROA
7.2%
Health
Liquidity and balance-sheet strength
Debt / equity
1.16x
Current ratio
2.31x
Quick ratio
1.28x
Total debt
$2.45B
Total cash
$155.00M
Growth
How the business has been compounding
Revenue TTM
$7.65B
Revenue 5Y CAGR
11.2%
EPS TTM
2.36
EPS 5Y CAGR
2.7%
Cash flow
How much cash the business throws off
Operating CF TTM
$655.00M
Free CF TTM
$604.00M
FCF margin
7.9%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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