Capital Southwest Corp (NASDAQ: CSWC) delivered a third-quarter performance that maintained the company's recent financial footing, reporting figures in line with expectations and reinforcing investor focus on income and capital preservation. The business development company, with a market capitalization of $1.33 billion, continues to trade close to its 52-week high of $23.86 and carries a price-to-earnings ratio of 14.4.
Quarterly returns and income
For fiscal third quarter 2026, Capital Southwest recorded net investment income (NII) of $0.64 per share and pretax NII of $0.60 per share, results that matched Citizens' projections and exceeded the consensus estimate of $0.58 per share. On a pretax basis, the company generated a net investment income return on equity of approximately 14.5% for the quarter, a level of performance that remained steady even as three 25-basis-point interest rate cuts were implemented before the end of the year.
Over the last twelve months, the company has produced revenue growth of 11.39%, underlining measured expansion in its investment activity during the period.
GAAP results and realized losses
Capital Southwest recorded modest net realized and unrealized losses totaling $1.9 million, which equates to about $0.03 per share. After accounting for this mark-to-market impact and a tax benefit of $0.05 per share, GAAP earnings per share came in at $0.61. The company's GAAP net income return on equity was roughly 14.5% for the quarter, consistent with its pretax NII return on equity.
Dividend profile
The firm continues to supply investors with a high income profile, paying a dividend yield of 16.07% and having sustained dividend payments for 44 consecutive years.
Analyst reaction and stock performance
Citizens analyst Brian McKenna reiterated a Market Outperform rating on Capital Southwest and maintained a $25.00 price target. McKenna noted that several quarterly metrics landed at the top end of the ranges the company previously disclosed in preliminary results on January 15. The stock has delivered a total return of 17.94% over the past year.
Additional research resources for the company include a set of 10 supplemental ProTips and a comprehensive Pro Research Report; the company is one of more than 1,400 U.S. equities covered in that research universe.
Preliminary operating results and balance sheet indicators
In a related update, the company published preliminary operating results for the fiscal third quarter ended December 31, 2025. In those estimates, pre-tax net investment income was placed between $0.59 and $0.60 per share, while preliminary net investment income was estimated between $0.63 and $0.64 per share. The estimated net asset value per share as of December 31, 2025, was projected to be in a range of $16.72 to $16.77.
Strategic initiatives and capital markets activity
Capital Southwest formed a joint venture with a private credit asset manager to target first out senior secured debt opportunities in the lower middle market. The joint venture will be owned equally by both parties, with investment and operational decisions to be taken by a board of managers with equal representation from each partner.
On the capital and origination front, Lucid Capital Markets upgraded its rating on Capital Southwest from Neutral to Buy, citing a strengthened origination pipeline and recent capital raising activity.
Leadership moves
The company also announced changes to its senior team, hiring Ryan Mullins as a managing director and promoting Grant Eason to managing director.
Conclusion
Capital Southwest's latest quarter reinforced a steady operating profile: NII matched expectations, returns on equity remained around 14.5%, and GAAP EPS reflected limited realized losses partially offset by a tax benefit. The company's substantial dividend yield and the analyst reaffirmation support continued investor interest, while the joint venture and recent upgrades point to active origination and capital deployment strategies.