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1. Company Snapshot

1.a. Company Description

CDW Corporation provides information technology (IT) solutions in the United States, the United Kingdom, and Canada.It operates through three segments: Corporate, Small Business, and Public.The company offers discrete hardware and software products and services, as well as integrated IT solutions, including on-premise, hybrid, and cloud capabilities across data center and networking, digital workspace, and security.


Its hardware products comprise notebooks/mobile devices, network communications, desktop computers, video monitors, enterprise and data storage, and others; and software products consists of application suites, security, virtualization, operating systems, and network management.The company also provides advisory and design, software development, implementation, managed, professional, configuration, and telecom services, as well as warranties; mission critical software, systems, and network solutions; and implementation and installation, and repair services to its customers through various third-party service providers.It serves government, education, and healthcare customers; and small, medium, and large business customers.


The company was founded in 1984 and is headquartered in Vernon Hills, Illinois.

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1.b. Last Insights on CDW

CDW Corporation's recent performance was negatively impacted by a decrease in operating income, which fell to $443.3 million from $481 million in the same period last year. Although the company beat quarterly profit estimates, its revenue growth was modest, with net sales increasing 4% year-over-year to $5,737.4 million. The company's gross profit margin remained relatively stable at 21.9%. Despite strong demand for IT solutions, including cloud adoption and AI, CDW's earnings call highlighted macro headwinds. (Source: CDW Reports Third Quarter 2025 Earnings)

1.c. Company Highlights

2. CDW's Q3 2025 Earnings: A Showcase of Resilient Performance

CDW reported consolidated net sales of $5.7 billion, up 4% year-over-year, with gross profit reaching $1.3 billion, a 5% increase. Non-GAAP net income per share came in at $2.71, a 3% rise. The company's gross margin expanded by 10 basis points to 21.9%. However, the actual EPS was $2.21, missing estimates of $2.62. Revenue growth was driven by strength in cloud, software, and services, with the Services division being a standout performer, growing 9% year-over-year.

Publication Date: Nov -05

📋 Highlights
  • Consolidated Net Sales Growth:: Revenue reached $5.7 billion, a 4% increase YoY, driven by strength in cloud, software, and services.
  • Non-GAAP Net Income Per Share:: Rose to $2.71 (+3% YoY), reflecting efficient gross profit growth of 5% and margin expansion to 21.9%.
  • Services Division Outperformance:: Achieved 9% top-line growth, contributing 9% of total revenue, with double-digit gains in professional and managed services.
  • International Market Expansion:: U.K. and Canada operations saw 9% sales growth, outpacing overall performance with accelerated profitability.
  • Shareholder Returns:: $242 million returned via $150 million share repurchases and $82 million dividends, exceeding 112% of adjusted free cash flow ($209M in Q3).

Segment Performance

The company's hardware segment saw a 3% increase in top-line, driven by NetComm and Servers, while storage declined. The Software segment grew 4%, with excellent gross profit performance driven by cloud and security. The Services division, which contributed 9% of total CDW top-line, was powered by double-digit growth in CDW professional and managed services. The U.K. and Canadian operations reported a 9% increase in net sales, with profitability growing faster than net sales.

Growth Prospects and Guidance

CDW maintained its full-year outlook, expecting U.S. IT market growth to be in the low single digits, with the company targeting a growth premium of 200 to 300 basis points. The company expects low- to mid-single-digit gross profit growth for the full year, with the second half contributing slightly above the first half. Analysts estimate next year's revenue growth at 3.1%.

Valuation and Return Metrics

With a P/E Ratio of 17.65 and an EV/EBITDA of 12.88, the market appears to be pricing in moderate growth expectations. CDW's ROE stands at 43.43%, indicating strong profitability. The company's Dividend Yield is 1.76%, and the Free Cash Flow Yield is 5.43%. The Net Debt / EBITDA ratio is 2.86, suggesting a manageable debt burden.

Management Insights and Outlook

According to Christine Leahy, the team has done an "outstanding job navigating in the post-DOGE landscape and building momentum" in the public vertical, particularly in the federal part, which has been challenging this year. The company is taking a conservative view of Q4, with some pipeline and backlog going into the quarter. The services business is expected to continue its growth trajectory, driven by AI deployments and security needs.

3. NewsRoom

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Market Today: Stocks Rise on Fed Cut Bets; Alphabet, Apple Hit Records

Nov -25

Source: gurufocus.com

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First Look: Alphabet nears $4T as Google chip talks jolt Nvidia

Nov -25

Source: gurufocus.com

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Contrasting Vertiv (NYSE:VRT) & CDW (NASDAQ:CDW)

Nov -14

Source: defenseworld.net

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CDW Corp: Tough To See Upwards Multiple Re-Rating In The Near Term (Rating Downgrade)

Nov -11

Source: seekingalpha.com

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The Zacks Analyst Blog CDW, California Resources, Exxon Mobil Corp and Entergy

Nov -07

Source: zacks.com

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Focus on 4 Stocks That Recently Hiked Dividends Amid Market Volatility

Nov -06

Source: zacks.com

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CDW Corporation (CDW) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

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CDW's Q3 Earnings & Revenues Top Estimates, Up Y/Y on Cloud Tailwinds

Nov -04

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.39%)

6. Segments

Corporate (Excl. Small Business)

Expected Growth: 8.3%

Large corporate clients drive CDW's sales growth, fueled by increasing IT spending, digital transformation, and cybersecurity demands, as well as CDW's strong relationships and expertise in serving this segment.

Public

Expected Growth: 8.6%

Public sector clients, such as government agencies and education institutions, drive CDW’s growth, as they increasingly invest in digital transformation, cybersecurity, and cloud infrastructure to improve operational efficiency and citizen services.

Small Business

Expected Growth: 10.9%

Growing demand for digital solutions among small businesses drives CDW's growth, fueled by increasing adoption of cloud-based services, cybersecurity, and data analytics.

Other

Expected Growth: 6.5%

CDW Corporations’ Other segment growth is driven by increasing demand for cloud-based services, cybersecurity solutions, and digital transformation initiatives.

7. Detailed Products

Hardware Solutions

CDW Corporation offers a wide range of hardware solutions, including laptops, desktops, tablets, servers, storage devices, and networking equipment from top manufacturers such as Apple, Cisco, Dell, HP, and Lenovo.

Software Solutions

CDW Corporation provides a vast array of software solutions, including operating systems, productivity software, security software, and data management tools from leading vendors such as Microsoft, VMware, and Symantec.

Cloud Solutions

CDW Corporation provides cloud solutions, including infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) offerings from top cloud providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP).

Security Solutions

CDW Corporation offers a range of security solutions, including threat detection, vulnerability assessment, and incident response services, to help organizations protect themselves against cyber threats.

Networking Solutions

CDW Corporation provides networking solutions, including routers, switches, and firewalls, from leading manufacturers such as Cisco and Juniper.

Data Management Solutions

CDW Corporation offers data management solutions, including data storage, backup and recovery, and data analytics tools, to help organizations manage and make sense of their data.

Services

CDW Corporation provides a range of services, including consulting, implementation, and support services, to help organizations design, deploy, and manage their IT solutions.

8. CDW Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is low due to the specialized nature of IT infrastructure needs. While cloud services or in-house solutions exist, they require significant upfront investment and expertise, making substitution challenging for most businesses.

Bargaining Power Of Customers

Large corporate clients, such as enterprises and government institutions, have strong bargaining power due to their high purchase volumes and reliance on CDW's expertise. They often negotiate pricing and service terms effectively.

Bargaining Power Of Suppliers

Suppliers like major tech manufacturers (e.g., Dell, HP) hold moderate power due to brand loyalty and product differentiation, but CDW’s scale allows it to negotiate favorable terms, balancing supplier influence.

Threat Of New Entrants

High barriers to entry, such as capital requirements, vendor certifications, and existing client relationships, limit new competitors. CDW’s established supplier partnerships and industry reputation deter newcomers.

Intensity Of Rivalry

The market is crowded with competitors like Tech Data and Ingram Micro, leading to aggressive pricing, service differentiation, and marketing efforts. This drives intense rivalry and margin pressure.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 71.81%
Debt Cost 4.77%
Equity Weight 28.19%
Equity Cost 8.65%
WACC 5.86%
Leverage 254.68%

11. Quality Control: CDW Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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IBM

A-Score: 5.5/10

Value: 1.5

Growth: 3.0

Quality: 6.3

Yield: 6.0

Momentum: 8.0

Volatility: 8.3

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Cognizant

A-Score: 5.5/10

Value: 5.5

Growth: 4.8

Quality: 7.5

Yield: 3.0

Momentum: 3.0

Volatility: 9.0

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CDW

A-Score: 4.5/10

Value: 3.8

Growth: 5.9

Quality: 5.3

Yield: 3.0

Momentum: 1.0

Volatility: 8.0

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Gartner

A-Score: 4.3/10

Value: 4.1

Growth: 8.1

Quality: 7.7

Yield: 0.0

Momentum: 0.5

Volatility: 5.3

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FIS

A-Score: 4.3/10

Value: 2.7

Growth: 3.6

Quality: 4.4

Yield: 5.0

Momentum: 2.0

Volatility: 8.0

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Fiserv

A-Score: 4.2/10

Value: 6.6

Growth: 8.1

Quality: 6.4

Yield: 0.0

Momentum: 1.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

146.25$

Current Price

146.25$

Potential

-0.00%

Expected Cash-Flows