Capital Southwest Corp reported preliminary Q3 2026 results that surpassed analyst expectations, with net investment income of $0.63‑$0.64 per share versus the consensus estimate of $0.56. Pre‑tax net investment income is projected at $0.59‑$0.60 per share, and the company’s net asset value per share is estimated at $16.72‑$16.77. Non‑accruals are expected to be 3.2% of the portfolio at cost and 1.5% at fair value.
The earnings beat follows a sequential rise from Q2 FY2026, where net investment income per share was $0.56‑$0.57, and a year‑over‑year lift from Q3 FY2025 of $0.62‑$0.63. The improvement is driven by higher realized gains from equity exits and a 4% increase in fee income, offsetting a modest rise in interest expense.
Segment analysis shows that the company’s core middle‑market lending portfolio delivered a 3% increase in loan balances, while the equity investment arm posted a 5% rise in unrealized gains. The low non‑accrual rate of 1.5% at fair value reflects disciplined credit underwriting and a portfolio mix that favors senior secured debt.
In a statement, President & CEO Michael Sarner said the quarter “demonstrates the strength of our disciplined investment strategy and the resilience of our middle‑market borrowers.” CFO Chris Rehberger highlighted that “the combination of fee growth and disciplined cost management has positioned us to maintain a healthy asset‑to‑liability ratio.” Management reiterated its confidence in the 2026 outlook, noting that the company will continue to deploy new committed capital and pursue opportunistic equity exits.
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