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CDW (CDW)
NASDAQ:CDW
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CDW
(NASDAQ:CDW)69Neutral
Positive Factors
Financial Performance
GM of core business grew q/q to 15.5%, which is viewed as a healthy margin level in a competitive market.
Market Sentiment
SMB grew y/y for the first time after two years of weakness, which is seen as a promising sign since in the past SMB has been a bellwether for a turn in market sentiment and spending.
Negative Factors
Guidance and Performance
CDW has missed or guided down in 5 of the last 6 quarters, indicating challenges in maintaining its historical growth rates.
Macroeconomic Uncertainty
Persistent macro uncertainty and idiosyncratic headwinds result in another miss in Q3 and below seasonal Q4 guidance.
Pricing Competition
Increased pricing competition and exposure to lumpy infrastructure solution deals contribute to CDW's underperformance.
CDW (CDW) vs. S&P 500 (SPY)
Market Cap
$22.70B
Dividend Yield1.45%
Average Volume (3M)1.35M
Price to Earnings (P/E)21.5
Beta (1Y)1.11
Revenue Growth-1.77%
EPS Growth-1.82%
CountryUS
Employees15,100
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)7.97
Shares Outstanding132,492,280
10 Day Avg. Volume1,209,051
30 Day Avg. Volume1,348,008
Financial Highlights & Ratios
PEG Ratio12.21
Price to Book (P/B)N/A
Price to Sales (P/S)1.09
Price to Cash Flow (P/CF)16.60
P/FCF Ratio16.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$219.33Price Target Upside27.08% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
CDW Business Overview & Revenue Model
Company DescriptionCDW Corp. engages in the provision of information technology solutions including mobility, security, data center optimization, cloud computing, virtualization and collaboration. It operates through the following segments: Corporate, Small Business, and Public. The Corporate segment serves the private sector business customers. The Small Business segment also caters to the private sector businesses but with smaller number of employees. The Public segment involves government agencies, education, and healthcare institutions. The company was founded in 1984 by Michael P. Krasny and is headquartered in Lincolnshire, IL.
How the Company Makes MoneyCDW makes money primarily through the sale of technology products and services. The company's revenue streams include the direct sale of hardware and software products from leading technology manufacturers, as well as the provision of IT services such as consulting, implementation, and managed services. CDW also generates revenue by offering cloud computing solutions and other advanced technology services. Key factors contributing to its earnings include strong partnerships with major technology vendors, a broad distribution network, and the ability to provide tailored solutions that meet the specific needs of its diverse customer base across various sectors.
CDW Financial Statement Overview
Summary
CDW exhibits solid financial health with strong profitability and cash generation capabilities. The company faces challenges in revenue growth and high leverage, but operational efficiency and cash flow management are commendable.Income Statement
CDW has demonstrated strong profitability with a consistent Gross Profit Margin around 22% over recent years. The company showed resilience in maintaining an EBIT Margin above 7% and EBITDA Margin above 9%, despite a slight dip in revenue growth. However, the decline in Total Revenue from 2022 to 2023 indicates potential challenges in sustaining top-line growth.80
Positive
Balance Sheet
The company maintains a high Debt-to-Equity Ratio of approximately 2.55, indicating significant leverage. However, the Return on Equity has been strong, reflecting efficient use of equity. The Equity Ratio improved to around 16% in 2023, showing better capitalization, albeit still low, suggesting some financial risk.72
Positive
Cash Flow
CDW has shown a solid Free Cash Flow to Net Income Ratio of over 1, indicating strong cash generation relative to profits. However, the Free Cash Flow Growth Rate has been negative recently, suggesting potential challenges in cash generation. The Operating Cash Flow to Net Income Ratio remains robust, underscoring strong operational performance.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 21.00B | 21.38B | 23.75B | 20.82B | 18.47B | Gross Profit |
| 4.60B | 4.65B | 4.69B | 3.57B | 3.21B | EBIT |
| 1.65B | 1.68B | 1.74B | 1.42B | 731.60M | EBITDA |
| 1.65B | 1.95B | 2.02B | 1.64B | 1.59B | Net Income Common Stockholders |
| 1.08B | 1.10B | 1.11B | 988.60M | 788.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 717.70M | 588.70M | 315.20M | 258.10M | 1.41B | Total Assets |
| 14.68B | 13.28B | 13.13B | 13.20B | 9.34B | Total Debt |
| 5.99B | 5.81B | 6.10B | 7.04B | 4.10B | Net Debt |
| 5.49B | 5.22B | 5.78B | 6.78B | 2.69B | Total Liabilities |
| 12.33B | 11.24B | 11.53B | 12.49B | 8.05B | Stockholders Equity |
| 2.35B | 2.04B | 1.60B | 705.70M | 1.30B |
| Cash Flow | Free Cash Flow | |||
| 1.15B | 1.45B | 1.21B | 684.60M | 1.16B | Operating Cash Flow |
| 1.28B | 1.60B | 1.34B | 784.60M | 1.31B | Investing Cash Flow |
| -659.20M | -229.60M | -164.50M | -2.77B | -201.00M | Financing Cash Flow |
| -686.90M | -1.10B | -1.10B | 832.80M | 138.80M |
CDW Technical Analysis
Negative
172.59
Price Trends
185.35
Negative
189.23
Negative
205.21
Negative
Market Momentum
-4.28
Positive
30.68
Neutral
8.03
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDW, the sentiment is Negative. The current price of 172.59 is below the 20-day moving average (MA) of 186.41, below the 50-day MA of 185.35, and below the 200-day MA of 205.21, indicating a bearish trend. The MACD of -4.28 indicates Positive momentum. The RSI at 30.68 is Neutral, neither overbought nor oversold. The STOCH value of 8.03 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CDW.
CDW Risk Analysis
CDW disclosed 29 risk factors in its most recent earnings report. CDW reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CDW Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $11.15B | 16.62 | 8.58% | 1.21% | 1.56% | 18.79% | |
73 Outperform | $70.62B | 45.82 | 129.87% | 0.95% | 8.41% | -7.83% | |
72 Outperform | $24.74B | 9.86 | 11.21% | 2.76% | 3.30% | 25.00% | |
69 Neutral | $22.70B | 21.49 | 49.04% | 1.45% | -1.77% | -1.82% | |
68 Neutral | $4.20B | 13.77 | 6.45% | 2.63% | -12.21% | -51.31% | |
66 Neutral | $5.45B | 14.56 | 6.78% | ― | -15.66% | -54.03% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
CDW
CDW
172.59
-72.74
-29.65%
ARW
Arrow Electronics
105.93
-14.43
-11.99%
AVT
Avnet
49.09
2.97
6.44%
MSI
Motorola Solutions
426.10
95.23
28.78%
SNX
TD SYNNEX Corporation
132.95
29.58
28.62%
HPE
Hewlett Packard Enterprise
18.89
1.19
6.72%
CDW Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -13.13% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call showed a mixed performance with significant achievements in healthcare, international sales, and strategic investments in cloud capabilities. However, challenges in the Education and Government segments and declines in operating income and full-year revenue highlight areas of concern.Highlights
Fourth Quarter Revenue Growth
The company delivered net sales of $5.2 billion in the fourth quarter, representing a 5% increase compared to 2023 on an average daily sales basis.
Healthcare Segment Performance
Healthcare revenue increased by 30% in the fourth quarter, driven by strategic investments and a strong execution reflecting a balanced success in cloud offerings and deep healthcare expertise.
International Sales Growth
The U.K. and Canadian operations together delivered sales of USD 2.5 billion, with international net sales increasing by 5% in the fourth quarter.
Shareholder Returns
The company returned $832 million to shareholders via dividends and share repurchases in 2024, and increased share repurchase authorization by $750 million.
Mission Cloud Services Acquisition
CDW acquired Mission Cloud Services to enhance AWS capabilities, cloud migration, and managed services, positioning the company for future growth.
Lowlights
Decline in Non-GAAP Operating Income
Non-GAAP operating income for the fourth quarter was nearly $500 million, down 4% compared to 2023.
Education Market Challenges
The Education segment declined 2% as declines in K-12 offset higher education performance, impacted by the end of stimulus-based funding.
Government Segment Uncertainty
Government sales faced challenges due to federal market uncertainty and spending pauses as agencies awaited clarity from the incoming administration.
Full Year Revenue Decline
For the full year 2024, net sales declined by 1.8% and gross profit decreased by 1.1% compared to 2023.
Company Guidance
During the CDW Fourth Quarter 2024 earnings call, the company provided guidance for 2025, projecting the U.S. IT market to grow by low single digits, with CDW aiming to outpace this growth by 200 to 300 basis points. In 2024, CDW reported fourth-quarter net sales of $5.2 billion, a 5% increase over 2023 on an average daily sales basis, and a gross profit of $1.16 billion, up 2% on an average daily basis. However, non-GAAP operating income was nearly $500 million, 4% below the previous year, and non-GAAP net income per share was $2.48, down 4% year-over-year. For the full year, CDW's net sales declined by 3%, with consolidated gross profit roughly 1% below 2023. Despite these challenges, the company generated over $1 billion in adjusted free cash flow and returned $832 million to shareholders through dividends and share repurchases. Additionally, CDW increased its share repurchase authorization by $750 million. Looking ahead, CDW expects to maintain stable gross margins in 2025 while continuing to leverage its broad portfolio of solutions and services to address customer priorities.CDW Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
CDW Announces Leadership Transition to Boost Growth
Positive
Oct 25, 2024
CDW Corporation has announced a significant leadership transition, with Christina M. Corley stepping into the role of President, International and Vice Chair, focusing on the company’s international growth strategy. Concurrently, Liz Connelly will expand her responsibilities as Chief Commercial Officer to drive U.S. sales and digital solutions. These shifts aim to bolster CDW’s growth, highlighting its commitment to strategic succession planning and leveraging strong leadership to maximize profitability and customer satisfaction.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.