CNM: 1Q26 Preview — Water We Expecting?

研报英文原文证据摘录

CNM: 1Q26 Preview — Water We Expecting?

June 4, 2026

Investment Conclusion

Core & Main (CNM): Outperform Rating; YE26 Price Target of $66

Investment Thesis 240

Leading player in an Attractive Industry: CNM is one of only two players of

scale in the water, wastewater and fire protection industries. We see an

outlook for MSD core growth over the medium term.

180 Market Outgrowth Can Continue: We believe that scale matters in

160 distribution, accentuated by tight supply chain conditions.

140 Margin Confidence is Important: Margins expanded 630bps to 14.1% over

120 2018/22, with investors concerned about sustainability. Management

100 confidence in the path to 15% by 2028 is an important signal that it will be

80 able to sustain higher levels of profitability.

60 Strong FCF Outlook: We support mgmt's surplus capital targets and see a

Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Jul-24 Sep-24 Nov-24 Jan-25 Mar-25 May-25 Jul-25 Sep-25 Nov-25 Jan-26 Mar-26 May-26 heavyOP Rating:tilt towardsWe havebuybacksbecomethatmoreshouldconfidentmateriallyin outlooklower sharefor count.2026 margin

inflection and view the valuation as too cheap. We see potential resi and

Distributors S&P500 CNM municipal demand inflections during 2026.

Source: Wolfe Research, FactSet

Price Target Methodology

Potential Catalysts Bull Case

Organic Growth (CAGR: '24-'27) 4% Infrastructure Bill: IIJA infrastructure bill includes $55bn for water

OM Expansion ('24-'27) 90bps infrastructure and this could be an important sentiment driver.

US Megaproject Outlook: We are seeing a pipeline of large manufacturing

EPS 2027e $4.06 and data center announcements that could provide a significant tailwind

P/E 19.5x into 2026/27.