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Core & Main's stock has fallen 12.8% over the past six months to $41.62, underperforming the S&P 500's 21.1% gain. The water, wastewater, and fire protection products distributor, formerly part of HD Supply, shows mixed signals for investors. The company demonstrated strong revenue growth of 12.9% annually over five years, outpacing average industrials companies. Its free cash flow margin expanded by 8.5 percentage points during the same period, reaching 8.2% over the trailing 12 months. However, Core & Main's return on invested capital has declined recently, suggesting new investments haven't yet delivered expected returns. The stock currently trades at 13.4 times forward price-to-earnings ratio. The company's fundamentals show resilience despite recent share price weakness.

Core & Main Q2 earnings call highlights. September 9, 2026 Key points. * Core & Main reported solid fiscal Q2 results: Sales rose 2.5% to about $2.1 billion, adjusted EBITDA increased 3% to $274 million, and adjusted EPS climbed 8% to $0.94. Municipal infrastructure, treatment plant projects, fire protection and data center work supported performance. * Growth areas offset market weakness. Data center-related activity nearly doubled year over year, fire protection sales rose 14%, and treatment plant projects delivered double-digit growth, while residential lot development declined by high single digits and traditional light commercial activity remained soft. * The company maintained its fiscal 2026 outlook for $7.8 billion-$7.9 billion in sales and $950 million-$980 million in adjusted EBITDA. Core & Main also continued aggressive capital allocation, repurchasing $169 million of shares during the quarter and expanding through seven new locations and the acquisition of Walker Industries. * Interested in Core & Main? Here are five stocks we like better. Core & Main NYSE: CNM reported higher fiscal 2026 second-quarter sales, adjusted EBITDA and adjusted earnings per share, supported by municipal infrastructure activity, treatment plant projects, fire protection demand and growing data center-related work. Second-quarter net sales rose 2.5% year over year to approximately $2.1 billion. Adjusted EBITDA increased about 3% to $274 million, while adjusted EBITDA margin expanded 10 basis points to 12.8%. Adjusted diluted earnings per share rose 8% to $0.94 from $0.87 a year earlier. CEO Mark Witkowski said the company saw momentum building across its backlog, large-project opportunities and acquisition pipeline. He also pointed to strong cash generation, balance-sheet flexibility and continued investments in new locations and product capabilities. Municipal market remains steady. Municipal demand remained a primary source of strength during the quarter. CFO Robyn Bradbury described the market as "strong, stable, steady," with activity growing in the low-single-digit range. She said repair and replacement work, along with funding sources available to municipalities, continued to support demand. Witkowski said water infrastructure investment remains a long-term priority, citing the Environmental Protection Agency's estimate that U.S. drinking water, wastewater and stormwater systems will require more than $1.2 trillion of investment over the next 20 years. He noted that most municipal water infrastructure spending is funded at the state and local level, particularly through utility rates. The company's treatment plant initiative posted another quarter of double-digit growth. Treatment plant projects now represent a mid-single-digit percentage of Core & Main's sales mix, according to management. The company is seeking to expand its specialty-product mix, technical expertise and project-support capabilities within that business. Core & Main's Smart Utility business recorded modest growth, with pricing contributing slightly and volume remaining essentially flat. President Brad Cowles said the business has a growing installed base and a substantial backlog, but some large deployments are taking longer to move through pilot phases and other startup work. Cowles said the Miami-Dade project, which he described as the largest project the company believes has been awarded in the sector, is moving through several pilot stages. Core & Main expects some Miami-Dade volume toward the end of the year, representing an estimated 5% to 10% of the overall project, with the project expected to reach fuller run rates in 2027. The five-year implementation is expected to involve approximately 100,000 meters installed and connected annually. Data centers and fire protection support non-residential activity. Non-residential construction was mixed, with continued softness in traditional light commercial and retail work. However, management said data center construction has helped support the category. Discover more Trade Financial Derivatives Stock market holidays Track Stock Earnings Data center-related activity nearly doubled from the prior-year quarter and increased from the low-single-digit range to the mid-single-digit range of Core & Main's overall business, Cowles said. Data centers now account for a high-single-digit percentage of the company's non-residential work. The company provides water, wastewater and storm-drainage infrastructure during site development, as well as fire protection systems as construction progresses. Cowles said data center developments can also drive secondary demand as municipalities expand water and wastewater capacity and as surrounding commercial and residential development grows. Fire protection sales increased 14% during the quarter. Management attributed the growth to higher volumes, share gains and higher steel prices. Bradbury said roughly two-thirds of the category's growth was related to steel pricing, with the remainder supported by volume growth. Residential lot development remained weak, declining by high single digits in the second quarter following a low-double-digit decline in the first quarter. Bradbury said Core & Main expects residential activity to be flat to down slightly in the second half as comparisons become easier, resulting in a mid-single-digit decline for the full fiscal year. Margins, cash flow and capital allocation. Gross margin was approximately 26.7%, roughly consistent with the prior-year quarter. Benefits from private-label and sourcing initiatives were offset by project-mix shifts and a stabilizing pricing environment in some categories. Pricing was slightly positive overall, as increases across much of the portfolio more than offset lower year-over-year PVC pricing. Total selling, general and administrative expense was approximately $301 million, roughly flat from the prior year and down about 40 basis points as a percentage of sales. Bradbury said cost management and savings initiatives helped offset inflation while allowing the company to continue investing in greenfield locations, acquisitions and growth initiatives. The company ended the quarter with about $2.2 billion of net debt and net debt leverage of approximately 2.3 times, within its target range. Total liquidity was approximately $1.5 billion, including more than $300 million of cash. Operating cash flow was $62 million in the quarter and $144 million in the first half. During the quarter, Core & Main repurchased 3.7 million shares for $169 million. Including repurchases made after quarter-end, the company said it has deployed nearly $270 million to repurchase approximately 5.7 million shares during fiscal 2026. Since its initial public offering, the company has repurchased nearly 25% of the shares outstanding at the time of the IPO. Expansion and outlook. Core & Main opened seven greenfield locations year to date and said it remains on pace to open a record number of locations this year. The new sites include locations in the western U.S., the Southeast and Canada. Following the quarter, the company acquired Walker Industries, a Hawaii-based provider of storm drainage products. Witkowski said the company's M&A pipeline has accelerated over the past three to six months, with several opportunities advancing through letters of intent and into diligence. Core & Main expects acquisitions to contribute roughly two to four percentage points of long-term sales growth, though management said that contribution could exceed that range in a given year if deal activity increases. The company reaffirmed fiscal 2026 guidance for net sales of $7.8 billion to $7.9 billion, adjusted EBITDA of $950 million to $980 million, and operating cash flow conversion of 60% to 70%. Management expects adjusted EBITDA margin expansion in the second half, with most of the year-over-year improvement expected in the fourth quarter. About Core & Main (NYSE:CNM). Core & Main, Inc NYSE: CNM is a leading distributor of water, sewer, storm drainage and fire protection products across North America. The company's product portfolio includes valves, hydrants, pipe and fittings, meters, couplings and other essential components that support municipal, industrial and environmental infrastructure projects. By combining a comprehensive inventory with logistics and technical support, Core & Main helps customers address complex water system and distribution challenges. With more than 300 branch locations and over 3,500 employees, Core & Main serves a diverse customer base that includes municipalities, contractors, engineers and utility providers. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. Before you consider Core & Main, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. 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