Since July 2024, Core & Main has been in a holding pattern, posting a small return of 3.5% while floating around $51.18. This is close to the S&P 500’s 4.8% gain during that period.
Given the underwhelming price action, is now a good time to buy CNM? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.
Why Are We Positive On CNM?
Formerly a division of industrial distributor HD Supply, Core & Main (NYSE:CNM) is a provider of water, wastewater, and fire protection products and services.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Core & Main grew its sales at an incredible 16.2% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers. 
2. Operating Margin Rising, Profits Up
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Looking at the trend in its profitability, Core & Main’s operating margin rose by 5.1 percentage points over the last five years, as its sales growth gave it immense operating leverage. Its operating margin for the trailing 12 months was 9.9%.
3. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Core & Main’s EPS grew at an astounding 46.5% compounded annual growth rate over the last five years, higher than its 16.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons Core & Main is a high-quality business worth owning, but at $51.18 per share (or 22.3× forward price-to-earnings), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Core & Main
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