Can Core & Main's (CNM) Growth Story Withstand Its Cautious 2025 Revenue Outlook?

• Earlier this week, Core & Main, Inc. reported second quarter sales of US$2.09 billion and net income of US$134 million, both up from the prior year, but also revised its full-year fiscal 2025 sales outlook downward to a range of US$7.6 billion to US$7.7 billion.
• This shift featured increased operational performance in the near term alongside a more cautious full-year revenue forecast, highlighting a contrast between recent gains and management's updated expectations.
• We'll explore how the lowered 2025 guidance may affect analysts' views on Core & Main's longer-term earnings growth trajectory.

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Core & Main Investment Narrative Recap

To be a shareholder in Core & Main, you need confidence in the company’s ability to leverage its scale and expansion in the water infrastructure market, while continuing to execute on margin improvement through private label growth and M&A. The lowered full-year guidance highlights softer expectations, but does not materially shift the critical short-term catalyst: continued investment in water systems by municipalities. The biggest risk remains exposure to construction market slowdowns, which could have a more pronounced effect if demand unexpectedly deteriorates.

Among recent announcements, Core & Main’s ongoing share buyback program stands out. The company has repurchased roughly US$201.7 million in stock under its current plan, which supports earnings per share even as near-term revenue expectations are reined in. This ongoing capital return is relevant as it helps offset risk from potential external headwinds.

Yet it is worth remembering: even as Core & Main shows resilience in capital deployment, a sustained construction slowdown could shift this calculus in ways investors should be aware of...

Read the full narrative on Core & Main (it's free!)

Core & Main's outlook anticipates $8.7 billion in revenue and $645.7 million in earnings by 2028. This is based on a projected annual revenue growth rate of 4.4% and a $229.7 million earnings increase from the current $416.0 million.

Uncover how Core & Main's forecasts yield a $59.64 fair value, a 23% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members’ fair value estimates for Core & Main range widely from US$46.37 to US$59.64 based on 2 submitted views. Municipal water infrastructure spending remains a key catalyst that can shape the company’s earnings path, so review multiple perspectives before forming an outlook.

Explore 2 other fair value estimates on Core & Main - why the stock might be worth as much as 23% more than the current price!

Build Your Own Core & Main Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Core & Main research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Core & Main research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Core & Main's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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