One-glance verdict
Undervalued
$59.44 our estimate vs market $43.81
Wall Street consensus: $60.27 (1.4% higher than our fair-value estimate)
26% below our estimate, below the bear case
Fundamentals snapshot
Core & Main, Inc.
CNM · NYQ · Industrials · Industrial Distribution
Current price
$43.81
52-week range
$41.88 - $67.18
Market cap
$8.48B
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 Operating margin compressed from 11.7% to 9.3% over 3 years.
What this company does
Core & Main, Inc.
Core & Main is a large-scale distributor of products needed to manage water, selling things like pipes, valves, and fire hydrants. The company makes most of its money by supplying these essential parts to cities and contractors for repairing America's aging water systems and for new construction projects. Because maintaining water infrastructure is a constant necessity for communities, it creates a steady demand for the company's products.
How the company got here
Core & Main started as a division of The Home Depot called HD Supply Waterworks. [3] In 2017, it was purchased by a private equity firm (a company that invests in other companies) and renamed Core & Main to focus specifically on water infrastructure. [3, 7] The company then became publicly traded on the stock market in 2021 through an IPO (Initial Public Offering, the first time a company sells its stock to the public). [3, 10] A key part of its growth has been acquiring many smaller, local distributors to expand its reach across the country. [2]
What it actually does
Core & Main is a specialty distributor, which is like a wholesaler for specific industries. [4] It doesn't make products, but instead buys them from thousands of manufacturers and sells them to over 60,000 customers like city governments, private water companies, and construction contractors. [3, 9] The company provides the essential, and often unseen, products needed to build and maintain the country's water systems, from pipes and hydrants under the ground to fire sprinklers in buildings. [13] With over 370 locations, it acts as a critical link between the makers of these products and the workers who install and repair them. [8]
Pipes, Valves & Fittings
This is the company's largest business, making up the majority of its revenue (the total money it brings in from sales). [3, 5] It provides the fundamental building blocks for water and wastewater systems, such as the pipes that carry drinking water to homes and the valves that control its flow. [3] Customers are typically contractors and municipalities who are repairing old water lines or building new ones for residential and commercial developments. [4] Think of this segment as the core hardware store for the nation's water grid.
Storm Drainage
This segment, which accounts for a significant slice of sales, provides products to manage rainwater and prevent flooding. [3, 5] This includes large-diameter pipes, manholes, grates, and other materials used to build systems that collect and channel storm runoff. [3] The main customers are contractors working on municipal projects and new construction, where managing water flow is a critical part of development. [4] This business helps communities handle heavy rainfall safely and effectively.
Meter Products
A smaller but growing part of the business focuses on products that measure and manage water usage. [3, 5] This includes traditional water meters as well as "smart meters" that allow utility companies to track water consumption remotely and more accurately. [3] The customers are mainly municipalities and private water companies looking to upgrade their infrastructure to better monitor water use, detect leaks, and improve billing. [4] This segment helps make water systems more efficient and technologically advanced.
Fire Protection
This business line provides the specialized equipment needed for fire suppression systems inside buildings, representing a smaller portion of total sales. [3, 5] Products include fire hydrants, sprinkler heads, and the special pipes and fittings required to connect them. [3] The customers are professional contractors who specialize in installing these life-saving systems in commercial and residential buildings to meet safety codes. [4]
What management is betting on now
The company's strategy focuses heavily on growth through acquisitions (buying smaller competitors) to enter new markets and consolidate a fragmented industry. [2, 9] Management is also focused on improving its gross margins (the percentage of profit made from sales before most operating costs) through smart purchasing and pricing. [17, 21] They are investing in specific high-growth areas like smart water meters and products for water treatment plants, seeing a large opportunity in upgrading America's aging water infrastructure. [10, 19] This strategy is funded by the cash the business generates, which is also used for share repurchases (when a company buys back its own stock to return value to shareholders). [17]
Price history
How the share price has moved
—
Loading price history…
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 $59.44 vs current price $43.81
Wall Street consensus is the average analyst price target: $60.27 (1.4% higher than our fair-value estimate).
Our most-likely fair value is $59.44 a share — about 35.7% above today's price of $43.81, 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 $526.20M 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 $441.50M Interest coverage 267.05x +4,338% vs CNM Carries about 44.4x more debt cushion than CNM.
Total debt $5.94B 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 18.6x P/E vs peer median 27.6x (32.8% cheaper).
Risks
-
Net debt grew 52.2% over 3 years.
-
Operating margin compressed from 11.7% to 9.3% over 3 years.
-
Insider ownership is only 0.5% (peer median: 1.8%).
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)
18.57x
Forward P/E
13.85x
P/B
4.03x
P/S
1.11x
EV/EBITDA
11.45x
PEG ratio
1.26x
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
—