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1. Company Snapshot

1.a. Company Description

Core & Main, Inc.distributes water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies, and professional contractors in the municipal, non-residential, and residential end markets in the United States.Its products include pipes, valves, hydrants, fittings, and other products and services; storm drainage products, such as corrugated piping systems, retention basins, inline drains, manholes, grates, geosynthetics, and other related products; fire protection products, including fire protection pipes, sprinkler heads and other devices, fire suppression systems, and related accessories, as well as fabrication services; and meter products, such as smart meter products, installation, software and other services.


The company's specialty products and services are used in the maintenance, repair, replacement, and construction of water and fire protection infrastructure.Core & Main, Inc.was founded in 1874 and is headquartered in St. Louis, Missouri.

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1.b. Last Insights on CNM

Core & Main's recent performance faces pressure due to collapsing residential demand, rising costs, and execution missteps. The company's 2Q25 results showed weak organic growth, deteriorating profitability, and a sharp downgrade in residential lot development outlook. Management's cost-control efforts will take time, leaving margins pressured. JPMorgan raised its price target to $64 but noted muted volume expectations for the back half of 2025. A sell rating was issued due to these challenges. (Source: Core & Main: The Growth Narrative Is Under Huge Pressure (Rating Downgrade))

1.c. Company Highlights

2. Core & Main's Q2 2025 Earnings: A Mixed Bag

Core & Main reported net sales of $2.1 billion, a 7% increase driven by 5% organic growth, with municipal demand remaining healthy and non-residential stable. Gross margins improved to 26.8%, boosted by private label and sourcing initiatives. However, operating expenses increased due to higher employee benefits, inflation, and recent acquisitions, resulting in an adjusted EBITDA margin decline to 12.7%. The company's actual EPS came out at $0.87, beating estimates of $0.776.

Publication Date: Sep -09

📋 Highlights
  • Revised Full-Year Guidance: Net sales now projected at $7.6-$7.7B, down $50M from prior guidance, with EBITDA at $920-$940M (down $45M).
  • Residential Market Decline: 20% segment expected to fall by low double digits due to higher rates and affordability challenges.
  • Gross Margin Expansion: Improved to 26.8% driven by private label (4% of revenue) and sourcing initiatives.
  • EBITDA Margin Pressure: Adjusted EBITDA margin fell to 12.7%, reflecting higher opex from benefits, inflation, and acquisitions.
  • Strategic Growth Focus: $550-$610M operating cash flow target, with investments in greenfield locations, tech, and Canadian acquisitions.

Financial Performance

The company's revenue growth was driven by a strong performance in non-residential markets, while residential demand softened. The revenue guidance was lowered by $50 million, and EBITDA by $45 million, primarily due to a weaker-than-expected residential market. The company's gross margin initiatives are performing well, with gross margins expected to remain stable in the second half of the year.

Valuation Metrics

Core & Main's current valuation metrics indicate a 'P/E Ratio' of 22.68, 'P/B Ratio' of 5.41, 'P/S Ratio' of 1.24, 'EV/EBITDA' of 13.01, and 'ROIC (%)' of 10.56. These metrics suggest that the company's stock is trading at a premium, with the market pricing in a certain level of growth. The 'Net Debt / EBITDA' ratio of 2.75 indicates a moderate level of debt.

Segment Performance

The residential lot development segment, which accounts for 20% of the company's revenue, is expected to decline in the low double digits due to higher interest rates and affordability concerns. However, the company highlighted success in treatment plants, fusible HDPE, and large contractor relationships, indicating a strong performance in non-residential markets.

Growth Opportunities

Core & Main remains optimistic about long-term growth potential, fueled by aging infrastructure, favorable funding, and the evolving water market landscape. The company continues to invest in organic growth, strategic acquisitions, and technology solutions to drive profitability and shareholder returns. Analysts estimate next year's revenue growth at 4.9%, indicating a moderate level of growth.

Cost Management

The company is taking cost-cutting measures, including in fire protection and sourcing, to offset the impact of inflation and higher costs in certain areas. While these efforts have been partially offset by inflation, the company expects cost-out actions to deliver more significant results in 2026.

3. NewsRoom

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Core & Main (CNM) Surpasses Market Returns: Some Facts Worth Knowing

Dec -03

Source:

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Core & Main: Real Demand Is Steady; The Narrative Just Hasn't Caught Up

Dec -03

Source: seekingalpha.com

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Bell Asset Management Ltd Sells 41,489 Shares of Core & Main, Inc. $CNM

Nov -27

Source: defenseworld.net

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Core & Main Updates Time of Fiscal 2025 Third Quarter Results Conference Call

Nov -26

Source: businesswire.com

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Core & Main to Announce Fiscal 2025 Third Quarter Results

Nov -25

Source: businesswire.com

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Core & Main (CNM) Stock Dips While Market Gains: Key Facts

Nov -25

Source: zacks.com

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Why Core & Main (CNM) Dipped More Than Broader Market Today

Nov -18

Source: zacks.com

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Bornite Capital Loads Up On Core and Main (CNM) With a 1 Million Share Purchase

Nov -07

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.52%)

6. Segments

Pipes, Valves and Fittings

Expected Growth: 5.5%

Core & Main's 5.5% growth in Pipes, Valves, and Fittings is driven by increasing infrastructure spending, replacement of aging water and gas systems, and rising demand for water conservation and efficiency solutions. Additionally, the company's strong distribution network and strategic acquisitions contribute to its growth momentum.

Storm Drainage

Expected Growth: 5.8%

Storm Drainage from Core & Main, Inc. growth of 5.8% driven by increasing infrastructure spending, urbanization, and climate change mitigation efforts. Rising demand for efficient water management systems, government initiatives for flood control, and growing adoption of sustainable drainage solutions also contribute to this growth.

Fire Protection

Expected Growth: 5.2%

Core & Main's Fire Protection segment growth of 5.2% is driven by increasing demand for fire safety systems in commercial and residential buildings, stringent government regulations, and rising adoption of advanced fire suppression technologies. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to its growth momentum.

Meter

Expected Growth: 5.6%

Meter from Core & Main, Inc. growth of 5.6% driven by increasing demand for water infrastructure upgrades, replacement of aging infrastructure, and adoption of smart metering technologies. Additionally, government initiatives and regulations focusing on water conservation and efficiency also contribute to the growth.

7. Detailed Products

Waterworks

Core & Main, Inc. provides a wide range of waterworks products, including pipes, valves, and fittings, to support the construction and maintenance of water and wastewater infrastructure.

Hydrants

The company offers a variety of hydrants, including dry and wet barrel hydrants, for firefighting and other applications.

Valves

Core & Main, Inc. supplies a broad range of valves, including gate, globe, and check valves, for water and wastewater applications.

Fittings

The company provides a wide selection of fittings, including elbows, tees, and couplings, for piping systems.

Pumps

Core & Main, Inc. offers a variety of pumps, including centrifugal and submersible pumps, for water and wastewater applications.

Meters

The company supplies a range of meters, including water and gas meters, for measuring fluid flow and consumption.

Pipe

Core & Main, Inc. provides a variety of pipes, including PVC, ductile iron, and steel pipes, for water and wastewater applications.

Fire Protection

The company offers a range of fire protection products, including fire hydrants, valves, and fittings, for commercial and industrial applications.

8. Core & Main, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Core & Main, Inc. is medium due to the availability of alternative products and services in the water, sewer, and fire protection markets.

Bargaining Power Of Customers

The bargaining power of customers for Core & Main, Inc. is low due to the company's strong relationships with its customers and its ability to provide customized solutions.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Core & Main, Inc. is medium due to the company's dependence on a few large suppliers and the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants for Core & Main, Inc. is low due to the high barriers to entry in the water, sewer, and fire protection markets, including regulatory hurdles and the need for significant capital investment.

Intensity Of Rivalry

The intensity of rivalry for Core & Main, Inc. is high due to the competitive nature of the water, sewer, and fire protection markets, with several large players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 57.12%
Debt Cost 3.95%
Equity Weight 42.88%
Equity Cost 9.68%
WACC 6.41%
Leverage 133.22%

11. Quality Control: Core & Main, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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MSC Industrial Direct Co

A-Score: 6.1/10

Value: 4.2

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.5

Volatility: 8.3

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Applied Industrial Technologies

A-Score: 5.7/10

Value: 3.2

Growth: 7.1

Quality: 7.2

Yield: 2.0

Momentum: 7.0

Volatility: 7.7

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Watsco

A-Score: 5.4/10

Value: 3.0

Growth: 6.9

Quality: 7.2

Yield: 6.0

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WESCO

A-Score: 5.2/10

Value: 4.5

Growth: 7.9

Quality: 5.6

Yield: 1.0

Momentum: 7.5

Volatility: 5.0

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Core & Main

A-Score: 5.0/10

Value: 4.0

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

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A-Score: 4.8/10

Value: 2.8

Growth: 6.9

Quality: 5.9

Yield: 3.0

Momentum: 3.0

Volatility: 7.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

50.23$

Current Price

50.23$

Potential

-0.00%

Expected Cash-Flows