CDW currently trades at $166.30 per share and has shown little upside over the past six months, posting a small loss of 3.6%. The stock also fell short of the S&P 500’s 11.3% gain during that period.
Is there a buying opportunity in CDW, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Do We Think CDW Will Underperform?
We're swiping left on CDW for now. Here are three reasons why CDW doesn't excite us and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, CDW’s sales grew at a tepid 3.8% compounded annual growth rate over the last five years. This fell short of our benchmark for the business services sector.
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect CDW’s revenue to rise by 1.9%. Although this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector.
3. EPS Growth Has Stalled Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
CDW’s flat EPS over the last two years was weak. On the bright side, this performance was better than its 1.1% annualized revenue declines.
Final Judgment
CDW falls short of our quality standards. With its shares lagging the market recently, the stock trades at 16.7× forward P/E (or $166.30 per share). This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment. Let us point you toward the most entrenched endpoint security platform on the market.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
