Breaking Down Core & Main, Inc. (CNM) Financial Health: Key Insights for Investors

Are you keeping a close watch on the infrastructure sector? With Core & Main, Inc. (CNM), a leading distributor of water, sewer, and fire protection products, understanding its financial health is crucial for making informed investment decisions. Did you know that in fiscal year 2024, Core & Main reported net sales of $7.4 billion and net income of $507 million? As investors, how do we interpret these figures and what key insights can we derive from them? Dive in as we dissect Core & Main's financial performance, explore its strategic positioning, and uncover what it all means for your investment strategy.

Core & Main, Inc. (CNM) Revenue Analysis

Core & Main, Inc. (CNM) operates as a distributor of waterworks and fire protection products in the United States and Canada. Understanding its revenue streams involves examining the sources, growth, and segment contributions that drive its financial performance.

Here's a breakdown of what shapes Core & Main, Inc. (CNM)'s revenue:

• Primary Revenue Sources: Core & Main, Inc. (CNM) generates revenue primarily from the sale of waterworks and fire protection products. These include pipes, valves, fittings, hydrants, and related products used in the construction, repair, and maintenance of water and fire protection systems.
• Year-over-Year Revenue Growth: Monitoring the year-over-year revenue growth rate provides insights into the company's ability to expand its market presence and capitalize on industry trends. This involves analyzing historical trends to identify periods of significant growth or decline, as well as understanding the factors driving these changes. For instance, the financial results for the first quarter of fiscal 2024 showed net sales of $1.74 billion, a 0.4% increase compared to the first quarter of fiscal 2023.
• Contribution of Business Segments: Analyzing the contribution of different business segments, such as waterworks and fire protection, to overall revenue helps identify key growth drivers and areas of strength. Understanding the relative importance of each segment allows investors to assess the company's diversification and resilience to market fluctuations.
• Significant Changes in Revenue Streams: Evaluating any significant changes in revenue streams is essential for understanding the company's strategic direction and adaptability. This may involve analyzing the impact of acquisitions, divestitures, or changes in product offerings on revenue generation.

To illustrate Core & Main, Inc. (CNM)'s revenue dynamics, consider the following data points from fiscal year 2024:

Net sales for fiscal year 2024 were reported at $7.4 billion, reflecting a 4.6% increase compared to the previous year. This growth was supported by strategic acquisitions and strong performance in key market segments.

A closer look at the first quarter of fiscal 2024 reveals:

• Net sales reached $1.74 billion, a 0.4% increase year-over-year.
• Gross profit was $471 million, with a gross profit margin of 27.1%.
• Net income was $121 million, or $0.50 per diluted share.
• Adjusted EBITDA was $240 million.

These figures highlight Core & Main, Inc. (CNM)'s ability to maintain growth and profitability, even amidst market variations.

Furthermore, examining specific financial metrics provides additional context:

Analyzing these revenue streams and financial results offers investors and stakeholders valuable insights into Core & Main, Inc. (CNM)’s financial health and strategic performance. For further details, you can explore: Breaking Down Core & Main, Inc. (CNM) Financial Health: Key Insights for Investors

Core & Main, Inc. (CNM) Profitability Metrics

Analyzing Core & Main, Inc. (CNM)'s profitability involves looking at several key metrics that indicate how well the company is managing its revenue and expenses. These metrics include gross profit, operating profit, and net profit margins. By examining these figures, investors can gain insights into the company's financial health and operational efficiency.

Here's a breakdown of these profitability metrics based on available information:

• Gross Profit: Gross profit is the revenue a company retains after deducting the costs associated with producing and selling its products or services. It provides insight into the efficiency of a company's production process. For the fiscal year 2024, Core & Main reported a gross profit of $1.97 billion.
• Operating Profit: Operating profit, also known as earnings before interest and taxes (EBIT), measures a company's profit from its core business operations, excluding interest and taxes. In fiscal year 2024, Core & Main's operating profit stood at $944 million.
• Net Profit: Net profit, often referred to as the bottom line, is the profit remaining after all expenses, including interest, taxes, and other costs, have been deducted from revenue. Core & Main's net profit for the fiscal year 2024 was $621 million.

Profit margins provide a clearer picture of profitability by expressing profits as a percentage of revenue:

• Gross Profit Margin: This is calculated by dividing gross profit by total revenue. For Core & Main in 2024, the gross profit margin was approximately 29.25%.
• Operating Profit Margin: Calculated as operating profit divided by total revenue. Core & Main's operating profit margin in 2024 was about 14.01%.
• Net Profit Margin: This is net profit divided by total revenue. Core & Main's net profit margin for 2024 was approximately 9.21%.

Here is a table summarizing Core & Main's profitability metrics for fiscal year 2024:

Analyzing trends in profitability over time helps to assess whether Core & Main is improving its efficiency and effectiveness. For instance, a consistent increase in gross margin may indicate better cost management or pricing strategies. Examining year-over-year changes in operating and net profit margins can reveal the impact of operational improvements or external factors on the company's bottom line.

When comparing Core & Main's profitability ratios with industry averages, it’s important to consider the specific sector in which it operates (i.e., the distribution of water, sewer, and fire protection products). Benchmarking against competitors and industry standards provides context for evaluating whether the company's profitability is above or below par. If Core & Main's margins are higher than the industry average, it could indicate a competitive advantage.

Operational efficiency is a critical driver of profitability. Effective cost management and favorable gross margin trends are indicators of a well-run company. A rising gross margin, for example, suggests that Core & Main is either reducing its production costs or increasing its selling prices effectively.

To gain more insight into Core & Main, Inc.'s values, you can read about the Mission Statement, Vision, & Core Values of Core & Main, Inc. (CNM).

Core & Main, Inc. (CNM) Debt vs. Equity Structure

Understanding how Core & Main, Inc. (CNM) finances its operations and growth is crucial for investors. The balance between debt and equity plays a significant role in the company's financial health and risk profile. Here’s a breakdown of Core & Main, Inc. (CNM)'s debt and equity structure:

As of the fourth quarter of fiscal year 2024, Core & Main, Inc. (CNM) reported the following:

• Total debt of $2.6 billion.
• Net debt of $2.3 billion.

These figures provide a snapshot of the company's overall leverage.

The debt-to-equity ratio is a key metric used to assess a company's financial leverage by comparing its total liabilities to its shareholders' equity. As of December 2023, Core & Main, Inc. (CNM)'s debt-to-equity ratio stood at approximately 1.2. This indicates that for every dollar of equity, the company carries $1.20 in debt. When evaluating this ratio, it's essential to compare it against industry standards to determine whether Core & Main, Inc. (CNM)'s leverage is within a reasonable range.

Core & Main, Inc. (CNM) actively manages its debt through various strategies, including new issuances and refinancing activities. For instance, in February 2024, the company issued $500 million in senior notes due in 2032. These notes carry an interest rate of 5.375%. Additionally, they refinanced their existing term loan B facility, reducing the applicable interest rate margin by 25 basis points and extending the maturity to March 2031. These actions demonstrate Core & Main, Inc. (CNM)'s proactive approach to optimizing its capital structure and reducing borrowing costs.

Here's a summary of Core & Main, Inc. (CNM)'s debt profile:

Core & Main, Inc. (CNM) strategically balances debt and equity to fund its growth initiatives and maintain financial flexibility. While debt financing can provide capital for expansion and acquisitions, equity funding helps to strengthen the company's balance sheet and reduce financial risk. The company's approach to capital allocation reflects its commitment to sustainable growth and value creation for shareholders.

To gain further insights into the types of investors that are investing in Core & Main, Inc. (CNM), consider reading Exploring Core & Main, Inc. (CNM) Investor Profile: Who’s Buying and Why?.

Core & Main, Inc. (CNM) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For Core & Main, Inc. (CNM), assessing these metrics provides insights into its financial stability and risk profile.

Assessing Core & Main, Inc.'s Liquidity:

Analyzing Core & Main's liquidity involves examining key ratios and cash flow trends that reflect its capacity to cover its immediate liabilities.

• Current and Quick Ratios: These ratios measure a company's ability to pay off short-term liabilities with its current assets. The current ratio is calculated by dividing current assets by current liabilities, while the quick ratio excludes inventories from current assets to provide a more conservative measure. For the fiscal year 2024, it is essential to refer to Core & Main's financial statements to obtain the exact figures. As of the latest data from Q1 2024, Core & Main's current ratio stood at 2.7x.
• Analysis of Working Capital Trends: Working capital, the difference between current assets and current liabilities, indicates a company's operational efficiency and short-term financial health. Monitoring trends in working capital helps identify whether the company is effectively managing its short-term resources.
• Cash Flow Statements Overview: A review of cash flow statements, specifically focusing on operating, investing, and financing activities, provides a comprehensive view of how Core & Main generates and uses cash.
  • Operating Cash Flow: Reflects the cash generated from the company's core business operations.
  • Investing Cash Flow: Shows cash used for investments in assets like property, plant, and equipment (PP&E).
  • Financing Cash Flow: Includes activities related to debt, equity, and dividends.

Here is a summary of Core & Main's cash flow activities for the fiscal year 2024 (based on available data):

Based on the data available, Core & Main exhibits a strong operating cash flow, which is a positive indicator of its ability to generate cash from its core business activities. The investing cash flow indicates investments in the company's assets, while the financing cash flow reflects activities related to debt and equity.

Potential Liquidity Concerns or Strengths:

Potential liquidity concerns might arise if Core & Main experiences a significant decrease in operating cash flow or an increase in short-term liabilities. Conversely, strengths include maintaining a healthy current ratio and generating positive operating cash flow.

To delve deeper into the company's investor profile, consider exploring: Exploring Core & Main, Inc. (CNM) Investor Profile: Who’s Buying and Why?

Core & Main, Inc. (CNM) Valuation Analysis

Determining whether Core & Main, Inc. (CNM) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. Here’s a breakdown of essential valuation metrics:

Price-to-Earnings (P/E) Ratio: The P/E ratio measures the relationship between a company's stock price and its earnings per share (EPS). As of March 2025, Core & Main's P/E ratio stands at 27.94. This indicates the amount investors are willing to pay for each dollar of Core & Main's earnings. A higher P/E ratio might suggest overvaluation if it's significantly above industry averages or the company's historical P/E. In comparison, Ferguson PLC has a P/E ratio of 24.99, while Fastenal's P/E ratio is 30.76.

Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. Core & Main's most recent P/B ratio is 4.17. This ratio can help investors determine if they are paying too much for the net assets of the company. A high P/B ratio could imply overvaluation, whereas a lower ratio might indicate undervaluation. For context, Ferguson PLC has a P/B ratio of 3.94, and Fastenal comes in at 6.17.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is used to assess a company's total value relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA). As of March 2025, Core & Main's EV/EBITDA ratio is 17.41. This ratio provides a more comprehensive valuation measure as it includes debt and other liabilities. A higher EV/EBITDA ratio might suggest the company is overvalued compared to its peers. Ferguson PLC has an EV/EBITDA ratio of 16.09, while Fastenal's EV/EBITDA is 21.89.

Stock Price Trends: Over the past year, Core & Main (CNM) has shown significant stock price appreciation. As of April 2025, the stock has increased from approximately $40 to over $60. This upward trend reflects strong investor confidence and positive market sentiment toward the company. Analyzing long-term stock price trends provides insights into the company's growth trajectory and overall market perception.

Dividend Yield and Payout Ratios: As of now, Core & Main does not offer a dividend. Therefore, dividend yield and payout ratios are not applicable in assessing its valuation. This aspect distinguishes it from some of its peers who might offer dividends as a return to shareholders.

Analyst Consensus: Analyst ratings provide a summarized view of professional financial experts' opinions on the stock. The consensus for Core & Main is a 'Moderate Buy,' reflecting overall positive expectations. Price targets from analysts range from $55 to $75, indicating potential upside from the current trading price. These ratings and price targets can influence investor decisions and market sentiment.

Here's a summary table of the valuation metrics discussed:

For more insights into who is investing in Core & Main, Inc. (CNM) and why, check out: Exploring Core & Main, Inc. (CNM) Investor Profile: Who’s Buying and Why?

Core & Main, Inc. (CNM) Risk Factors

Core & Main, Inc. (CNM) faces a variety of internal and external risks that could significantly impact its financial health. These risks span across industry competition, regulatory changes, and broader market conditions. Understanding these potential challenges is crucial for investors.

Here's an overview of key risk areas:

• Industry Competition: The market for waterworks and fire protection products is competitive. Core & Main faces competition from both national and regional distributors, as well as direct sales from manufacturers. Increased competition could lead to pricing pressures, reduced margins, and loss of market share.
• Regulatory Changes: Core & Main is subject to various federal, state, and local regulations, including environmental, health, and safety laws. Changes in these regulations could increase compliance costs, require significant capital expenditures, and adversely affect operations.
• Market Conditions: Economic downturns, fluctuations in construction activity, and changes in municipal spending can significantly impact the demand for Core & Main's products. A decrease in infrastructure investment or a slowdown in residential and commercial construction could reduce sales and profitability.
• Supply Chain Disruptions: Disruptions in the supply chain, whether due to natural disasters, geopolitical events, or other factors, could lead to product shortages, increased costs, and delays in fulfilling customer orders. Core & Main relies on a network of suppliers, and any significant disruption could negatively impact its business.
• Cybersecurity Threats: Core & Main, Inc. (CNM) is vulnerable to cybersecurity threats, which could compromise sensitive data, disrupt operations, and damage its reputation. Implementing and maintaining robust cybersecurity measures is essential to mitigate these risks.

According to Core & Main's most recent 2024 filings, several operational, financial, and strategic risks are highlighted:

• Integration Risks: Core & Main has grown through acquisitions, and integrating acquired businesses involves significant risks. These risks include difficulties in assimilating operations, technologies, and personnel, as well as potential disruptions to existing business.
• Debt Levels: As of fiscal year 2024, Core & Main carries a significant amount of debt. This debt could impact the company's financial flexibility, limit its ability to invest in growth opportunities, and increase its vulnerability to economic downturns.
• Interest Rate Risk: Fluctuations in interest rates could increase Core & Main's borrowing costs, reducing profitability. A rise in interest rates could also decrease the attractiveness of the company's stock to investors.

While specific mitigation strategies are not always detailed in earnings reports, Core & Main generally addresses these risks through:

• Diversification of Supply Chain: Reducing reliance on single suppliers to minimize the impact of disruptions.
• Proactive Compliance Programs: Staying ahead of regulatory changes through robust compliance programs and engagement with policymakers.
• Strategic Acquisitions: Carefully evaluating and integrating acquisitions to maximize synergies and minimize disruptions.
• Financial Risk Management: Employing strategies to manage debt levels and interest rate exposure.

For further insights into Core & Main's values, see: Mission Statement, Vision, & Core Values of Core & Main, Inc. (CNM).

Core & Main, Inc. (CNM) Growth Opportunities

Core & Main, Inc. (CNM) has several key growth drivers that suggest a positive outlook. These include strategic acquisitions, market expansion, and product innovation aimed at meeting the evolving needs of the waterworks and fire protection industries.

For fiscal year 2024, Core & Main reported net sales of $7.4 billion, reflecting a 7.8% increase compared to fiscal year 2023. This growth was driven by both organic sales and strategic acquisitions. The company's focus on consolidating a fragmented market through acquisitions has been a significant contributor to its revenue growth.

Future revenue growth projections and earnings estimates point towards continued expansion. Analysts predict that Core & Main will sustain its growth trajectory through ongoing infrastructure investments and its ability to capitalize on market opportunities. The company's adjusted EBITDA for fiscal year 2024 was $973 million, an increase of 12.3% year-over-year, showcasing its operational efficiency and profitability.

Strategic initiatives and partnerships are also expected to play a crucial role in driving future growth. Core & Main's emphasis on digital solutions and value-added services enhances customer engagement and loyalty. These initiatives, combined with partnerships aimed at expanding its product offerings, position the company favorably for sustained growth.

Core & Main possesses several competitive advantages that support its growth prospects:

• National Scale: A widespread distribution network enables efficient service delivery across various geographic locations.
• Product Breadth: A comprehensive range of products caters to diverse customer needs within the waterworks and fire protection sectors.
• Expertise: Deep industry knowledge and experienced professionals provide a competitive edge in addressing complex project requirements.
• Acquisition Strategy: A proven track record of successful acquisitions strengthens market position and expands capabilities.

These advantages, combined with a favorable market environment driven by infrastructure spending and regulatory tailwinds, should allow Core & Main to maintain its growth momentum.

Here's a look at some key financial highlights from Core & Main's fiscal year 2024:

These figures demonstrate Core & Main's strong financial performance and its ability to generate significant revenue and earnings.

To gain more insights into Core & Main, Inc. (CNM) financial health, you can read this article: Breaking Down Core & Main, Inc. (CNM) Financial Health: Key Insights for Investors