⚠️ This AI-generated report synthesizes publicly available information. AI can make mistakes. Please double check information in this report.
CDW Corporation
Technology | Information Technology Services
⚡ Executive Summary
📊 THE BOTTOM LINE
CDW is a leading IT solutions provider with a robust business model centered on delivering comprehensive hardware, software, and services to a diverse clientele. While facing competitive pressures, its broad portfolio and integrated approach allow it to adapt to evolving technology needs. The business demonstrates strong operational capabilities.
⚖️ RISK VS REWARD
At its current price, CDW trades at a trailing P/E of 18.49x, slightly above some industry peers. With an average analyst price target of US$182, there is a potential upside of approximately 24% from the current US$146.25, against potential downside in a challenging market. The risk/reward appears balanced, suggesting fair valuation.
🚀 WHY CDW COULD SOAR
- • Accelerated Digital Transformation: Increased enterprise spending on cloud, AI, and cybersecurity drives demand for CDW's integrated solutions.
- • Market Share Expansion: Strategic acquisitions and deeper penetration in government and healthcare sectors could significantly boost revenue.
- • Services-Led Growth: Expanding high-margin advisory and managed services offerings will enhance profitability and recurring revenue streams.
⚠️ WHAT COULD GO WRONG
- • Economic Slowdown: Reduced IT budgets by businesses and public sector clients during an economic downturn could impact sales.
- • Intense Competition: Fierce competition from other resellers and direct vendors may lead to pricing pressure and margin compression.
- • Supply Chain Disruptions: Delays or shortages in hardware components could hinder product availability and project delivery, affecting revenue.
🏢 Company Overview
💰 How CDW Makes Money
- • CDW provides a broad range of information technology (IT) solutions, encompassing discrete hardware and software products, as well as integrated IT solutions.
- • The company offers on-premise and cloud capabilities across hybrid infrastructure, digital experience, and security domains.
- • CDW serves a diverse customer base, including business, government, education, and healthcare sectors across the United States, the United Kingdom, and Canada.
Revenue Breakdown
Hardware
72%
Sale of notebooks, network devices, data storage, and desktop computers.
Services
18%
Advisory, design, implementation, and managed services for IT solutions.
Software
10%
Cloud solutions, application suites, security software, and operating systems.
🎯 WHY THIS MATTERS
CDW's diversified offerings across hardware, software, and services, combined with its broad customer base, provide a resilient revenue model. This integrated approach allows the company to address complex client needs, fostering long-term relationships and adapting to evolving technology trends.
⭐ Competitive Advantage: What Makes CDW Special
1. Comprehensive Portfolio & Integrated Solutions
CDW offers an extensive range of hardware, software, and services from thousands of brands, enabling it to provide end-to-end integrated IT solutions. This breadth allows clients to consolidate their IT procurement and support with a single vendor, simplifying complex IT environments and enhancing efficiency. This integrated approach creates a sticky customer relationship due to the convenience and expertise offered.
2. Diverse Customer Base & Geographic Reach
Serving corporate, small business, government, education, and healthcare sectors across North America and the UK diversifies CDW's revenue streams. This broad market exposure reduces dependence on any single industry or region, providing stability and resilience against sector-specific downturns. The deep understanding of varied client needs strengthens its market position and competitive advantage.
3. Strong Vendor Relationships & Supply Chain Expertise
CDW maintains deep relationships with leading technology vendors, ensuring access to a wide array of products and favorable pricing. Coupled with robust supply chain management, this allows efficient product delivery and solution deployment, even amidst global disruptions. This expertise is critical for providing timely and cost-effective IT solutions, a key differentiator in a fragmented market.
🎯 WHY THIS MATTERS
These advantages collectively position CDW as a crucial partner in the IT ecosystem. The ability to offer a vast array of integrated solutions, cater to diverse markets, and leverage strong vendor relationships ensures a robust and defensible business model, supporting sustained profitability and market relevance.
👔 Who's Running The Show
Christine A. Leahy
Chair, President and Chief Executive Officer
Christine A. Leahy is the Chair, President, and CEO of CDW Corporation, appointed in January 2019. She is responsible for the company's strategic direction and performance, with a tenure of over six years. Her leadership is pivotal in navigating the complex multi-brand technology solutions environment.
⚔️ What's The Competition
CDW operates in a highly fragmented IT solutions and managed services industry, facing substantial competition across its diverse offerings. Key players range from broad IT service providers to specialized hardware and software resellers. Customers typically choose based on comprehensive solutions, pricing, and service reliability.
📊 Market Context
- Total Addressable Market - The global IT services market is projected to reach US$1.2 trillion by 2033, growing at a 9.4% CAGR (2025-2030), driven by data analytics and automation.
- Key Trend - Enterprises are increasingly adopting integrated, hybrid cloud solutions and digital experience services to enhance operational efficiency.
Competitor
Description
vs CDW
Insight Enterprises (NSIT)
A global provider of IT hardware, software, cloud, and service solutions, with a strong focus on digital transformation.
Offers similar broad IT solutions, often competing with CDW on price, service breadth, and strategic partnerships for digital innovation.
PC Connection (PCCC)
A direct marketing reseller of IT products and services, serving business, government, and education markets.
Competes with CDW in the direct resale of IT hardware and software, often focusing on competitive pricing and extensive product availability.
ePlus inc. (PLUS)
A provider of technology solutions including managed services, security, and cloud offerings.
Directly competes with CDW in integrated IT solutions and managed services, often differentiating through specialized technical expertise and consultancy.
Market Share - IT Solutions & Services Market
CDW
5%
Insight Enterprises
3%
PC Connection
2%
ePlus inc.
1%
Others
89%
📊 Valuation & Analysis
📈 Wall Street Summary
Analyst Rating Distribution - 4 Hold, 5 Buy, 2 Strong Buy
4
5
2
12-Month Price Target Range
Low Target
US$148
+1%
Average Target
US$182
+24%
High Target
US$225
+54%
Current: US$146.25
🚀 The Bull Case - Upside to US$225
1. Expanding Managed Services Portfolio
High Probability
Growth in CDW's managed services, particularly in cybersecurity and cloud, is expected to generate higher-margin recurring revenue. This shift could boost overall profit margins by 1-2% and enhance revenue predictability over the next 3-5 years.
2. Strategic Acquisitions Fueling Growth
Medium Probability
Successful integration of strategic acquisitions in niche technology areas (e.g., AI infrastructure) could open new markets or significantly expand existing capabilities. This could add 3-5% to annual revenue growth and diversify the customer base.
3. Strong Public Sector Spending
High Probability
Continued robust IT spending by government and education sectors, driven by modernization initiatives, provides a stable and growing demand channel. This could offset potential fluctuations in corporate spending and ensure consistent revenue streams.
🐻 The Bear Case - Downside to US$148
1. Economic Downturn & IT Budget Cuts
Medium Probability
A significant economic slowdown could lead to widespread cuts in IT budgets across corporate and small business clients. This would directly impact CDW's hardware and software sales, potentially reducing overall revenue by 5-10% annually.
2. Intensified Competition & Pricing Pressure
Medium Probability
Increased competition from large technology companies and other value-added resellers could lead to pricing pressure on products and services. This erosion of pricing power might reduce CDW's gross margins by 50-100 basis points, impacting profitability.
3. Supply Chain Vulnerabilities
Low Probability
Ongoing global supply chain disruptions could result in prolonged shortages of critical hardware components. This would delay product delivery to customers, potentially leading to lost sales and decreased customer satisfaction, affecting quarterly revenue by 2-4%.
🔮 Final thought: Is this a long term relationship?
Owning CDW for a decade hinges on its ability to continually adapt to rapid technological changes and maintain its position as a trusted IT solutions advisor. The company's diversified business model and strong customer relationships provide a solid foundation. Key challenges include managing competition, mitigating economic downturn impacts on IT spending, and successfully integrating new technologies. Sustained investment in high-margin services and strategic M&A will be crucial for long-term value creation. Management's track record of operational efficiency supports a long-term holding thesis, provided innovation remains a priority.
📋 Appendix
Financial Performance
Metric
FY 2022
FY 2023
FY 2024
FY 2025 (Est)
FY 2026 (Est)
Income Statement
Revenue
US$23.75B
US$21.38B
US$21.00B
US$22099.10B
US$22983.06B
Gross Profit
US$4.69B
US$4.65B
US$4.60B
US$4774.30B
US$4964.93B
Operating Income
US$1.74B
US$1.68B
US$1.65B
US$1633.50B
US$1698.45B
Net Income
US$1.11B
US$1.10B
US$1.08B
US$1051.30B
US$992.52B
EPS (Diluted)
8.13
8.10
7.97
7.91
7.47
Balance Sheet
Cash & Equivalents
US$0.32B
US$0.59B
US$0.50B
US$452.90B
US$452.90B
Total Assets
US$13.13B
US$13.28B
US$14.68B
US$15197.60B
US$15501.55B
Total Debt
US$6.10B
US$5.81B
US$5.99B
US$5757.60B
US$5757.60B
Shareholders' Equity
US$1.60B
US$2.04B
US$2.35B
US$2539.70B
US$2590.49B
Key Ratios
Gross Margin
19.7%
21.8%
21.9%
21.6%
21.6%
Operating Margin
7.3%
7.9%
7.9%
7.4%
7.4%
Return on Equity (TTM)
69.51
54.07
45.81
43.01
43.01
Valuation Ratios
| Metric | Value | Description |
|---|---|---|
| P/E Ratio (TTM) | 18.49 | Measures the price paid for a share relative to the annual net income earned by the share, indicating how much investors are willing to pay for each dollar of earnings. |
| Forward P/E | 14.45 | Indicates the price paid for a share relative to estimated future earnings, providing insight into investor expectations for future growth. |
| PEG Ratio | N/A | Compares the P/E ratio to the company's earnings growth rate, used to determine if a stock's price is reasonable relative to its expected growth. |
| Price/Sales (TTM) | 0.87 | Compares a company’s stock price to its revenue per share, useful for valuing companies with low or negative earnings. |
| Price/Book (MRQ) | 7.40 | Measures how much investors are willing to pay for each dollar of book value (assets minus liabilities), indicating premium valuation relative to net assets. |
| EV/EBITDA | 12.40 | Compares the total value of a company (enterprise value) to its EBITDA, providing a comprehensive valuation multiple that accounts for debt. |
| Return on Equity (TTM) | 0.43 | Measures the profitability of a company in relation to the equity of its shareholders, indicating how efficiently management is using shareholder investments. |
| Operating Margin | 0.08 | Represents the percentage of revenue left after paying for operating expenses, indicating a company's operational efficiency. |
Peer Comparison
| Company | Market Cap (B) | P/E Ratio | P/B Ratio | Revenue Growth (%) | Operating Margin (%) |
|---|---|---|---|---|---|
| CDW Corporation (Target) | 19167.63 | 18.49 | 7.40 | 4.0% | 7.8% |
| Insight Enterprises | 5000.00 | 17.50 | 2.50 | 7.5% | 4.0% |
| PC Connection | 1000.00 | 12.50 | 1.50 | 2.5% | 3.0% |
| ePlus inc. | 2000.00 | 22.50 | 3.50 | 9.5% | 5.0% |
| Sector Average | — | 17.50 | 2.50 | 6.5% | 4.0% |