CNM Stock Forecast & Price Target

Core & Main reported a gross margin of 26.8%, reflecting a 40 basis point improvement from the prior year, indicating the company's ability to improve profitability amidst stable market conditions. The company's net sales grew by 6.6% year-over-year, driven by a 5% volume increase along with contributions from acquisitions, showcasing robust demand across its specialty distribution markets. Additionally, management anticipates a sequential improvement in SG&A expenses as a percentage of revenues in the latter half of the fiscal year, suggesting enhanced operational efficiency and potential for further margin expansion.

Core & Main has experienced a negative shift in outlook, reflected by management's reduction of their 2025 adjusted EBITDA guidance to a range of $920 million to $940 million, significantly below the market expectation of $980 million. This revision has been attributed to a decline in residential demand and an increase in operating expenses, which are contributing to an overall unfavorable business environment. Additionally, the company's results align with peers who have similarly reported weakened expectations, particularly noting reduced residential volumes in August.