CDW Stock Isn't A Buy Yet
POLAND - 2024/12/17: In this photo illustration, the CDW Corporation company logo is seen displayed ... More on a smartphone screen. (Photo Illustration by Piotr Swat/SOPA Images/LightRocket via Getty Images)
CDW (NASDAQ:CDW), a reseller of technology products and services, experienced a rise in its stock of approximately 7% on Wednesday after announcing Q1 2025 results that exceeded expectations, including an adjusted earnings increase of nearly 10% to $286.5 million. This quarter's growth was fueled by escalating demand for notebooks, desktops, mobile devices, software, and services.
Multiple industry trends are propelling the company's growth. For instance, businesses are increasing their investment in hybrid work solutions and cloud-based software, resulting in higher demand for mobile devices and software-as-a-service tools. Concurrently, public sector IT modernization, especially in the healthcare and education sectors, is gaining momentum. As IT requirements become more complex, firms are choosing partners capable of delivering comprehensive solutions, an advantage for CDW, which has extensive offerings and a robust vendor network.
When considering what you pay per dollar of sales or profit, CDW stock appears affordable relative to the broader market.
• CDW has a price-to-sales (P/S) ratio of 1.0 compared to 2.8 for the S&P 500
• Additionally, the company's price-to-free cash flow (P/FCF) ratio stands at 16.7 versus 17.6 for the S&P 500
• Furthermore, it features a price-to-earnings (P/E) ratio of 19.8, while the benchmark's ratio is 24.5
CDW's Revenues have experienced slight growth over the past few years.
• CDW's revenue has increased at an average rate of 0.8% over the last 3 years (compared to an increase of 6.2% for the S&P 500)
• Its revenues have declined by 1.8% from $21 Bil to $21 Bil in the previous 12 months (whereas the S&P 500 experienced a growth of 5.3%)
The profit margins of CDW are considerably lower than most companies in the Trefis coverage universe.
• CDW's Operating Income over the past four quarters was $1.7 Bil, which translates to a weak Operating Margin of 7.9% (compared to 13.1% for the S&P 500)
• CDW's Operating Cash Flow (OCF) during this timeframe was $1.3 Bil, indicating a poor OCF Margin of 6.1% (versus 15.7% for S&P 500)
• Over the last four quarters, CDW's Net Income stood at $1.1 Bil, reflecting a poor Net Income Margin of 5.1% (compared to 11.3% for S&P 500)
The balance sheet of CDW appears fragile.
• At the end of the most recent quarter, CDW had a Debt figure of $6.0 Bil, while its market capitalization is $23 Bil (as of 5/7/2025). This results in a moderate Debt-to-Equity Ratio of 28.1% (compared to 21.5% for S&P 500). [Note: A lower Debt-to-Equity Ratio is preferable]
• Cash (including cash equivalents) constitutes $718 Mil of the total assets of $15 Bil for CDW. This results in a poor Cash-to-Assets Ratio of 4.9% (compared to 15.0% for S&P 500)
CDW stock has experienced an impact that was slightly greater than the benchmark S&P 500 index during several recent downturns. While investors hope for a gentle landing for the U.S. economy, how severe could it get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash illustrates the performance of key stocks during and after the last six market crashes.
Inflation Shock (2022)
• CDW stock dropped 26.7% from a peak of $208.13 on January 4, 2022, to $152.59 on October 12, 2022, compared to a peak-to-trough decline of 25.4% for the S&P 500
• The stock completely recovered to its pre-crisis peak by February 13, 2023
• Following this recovery, the stock increased to a high of $257.87 on March 27, 2024, and presently trades at approximately $175
• CDW stock fell 45.0% from a high of $144.60 on January 15, 2020, to $79.56 on March 20, 2020, in contrast to a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by February 4, 2021
In conclusion, CDW's performance across the metrics mentioned above is as follows:
• Growth: Neutral
• Profitability: Very Weak
• Financial Stability: Weak
• Downturn Resilience: Neutral
• Overall: Weak
Thus, even with its moderate valuation, this renders the stock risky and reinforces our view that CDW may not presently be a wise investment choice.
While CDW stock appears discouraging, investing in a single stock carries inherent risks. Conversely, the Trefis High Quality (HQ) Portfolio, comprising a selection of 30 stocks, has a history of consistently outperforming the S&P 500 over the previous 4 years. What accounts for this? As a collective, HQ Portfolio stocks have yielded better returns with lower risk in comparison to the benchmark index; they present a smoother investment experience as evidenced in HQ Portfolio performance metrics.
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We take a highly specialized and targeted approach, applying our deep expertise across multiple vaccine modalities, focused on providing either first-, best- or only-in-class vaccine have a strong track record, having advanced multiple vaccines from early R&D to approvals, and currently market three proprietary travel vaccines, including the world's first and only chikungunya vaccine, as well as certain third-party from our growing commercial business help fuel the continued advancement of our vaccine pipeline. This includes the only Lyme disease vaccine candidate in advanced clinical development, which is partnered with Pfizer, the world's most clinically advanced Shigella vaccine candidate, as well as vaccine candidates against the Zika virus and other global public health threats. More information is available at About CEPICEPI was launched in 2017 as an innovative partnership between public, private, philanthropic and civil organizations. Its mission is to accelerate the development of vaccines and other biologic countermeasures against epidemic and pandemic threats so they can be accessible to all people in need. CEPI has supported the development of more than 50 vaccine candidates or platform technologies against multiple known high-risk pathogens or a future Disease X. Central to CEPI's pandemic-beating five-year plan for 2022-2026 is the '100 Days Mission' to compress the time taken to develop safe, effective, globally accessible vaccines against new threats to just 100 days. Learn more at Follow us on X (@CEPIvaccines), LinkedIn and Facebook. About Horizon EuropeHorizon Europe — #HorizonEU — is the European Union's flagship Research and Innovation programme, part of the EU-long-term Multiannual Financial Framework (MFF) with a budget of €95,5 billion to spend over a seven-year period (2021-2027). Under Horizon Europe, health research will be supported with the aim to find new ways to keep people healthy, prevent diseases, develop better diagnostics and more effective therapies, use personalised medicine approaches to improve healthcare and wellbeing, and take up innovative health technologies, such as digital ones. Valneva Investor and Media ContactsLaetitia Bachelot-FontaineVP Global Communications & European Investor RelationsM +33 (0)6 4516 Joshua Drumm, Global Investor RelationsM +001 917 815 Forward-Looking StatementsThis press release contains certain forward-looking statements relating to the business of Valneva, including with respect to use and regulatory review of existing products. In addition, even if the actual results or development of Valneva are consistent with the forward-looking statements contained in this press release, those results or developments of Valneva may not be sustained in the future. 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Valneva is providing this information as of the date of this press release and disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 1 Valneva Reports Positive Phase 2 Results in Children for its Chikungunya Vaccine and Announces Phase 3 Dose Decision - Valneva2 Valneva Announces Positive Phase 3 Pivotal Results for its Single-Shot Chikungunya Vaccine Candidate - Valneva3 Valneva Successfully Completes Pivotal Phase 3 Trial of Single-Shot Chikungunya Vaccine Candidate - Valneva4 Lancet Paper: Valneva Reports Positive Initial Phase 3 Safety Data in Adolescents for its Single-Shot Chikungunya Vaccine Candidate - Valneva6 Valneva Reports Positive Pivotal Phase 3 Immunogenicity Data in Adolescents for its Single-Shot Chikungunya Vaccine Candidate - Valneva7 Lancet Paper: 12 PAHO/WHO data: Number of reported cases of chikungunya fever in the Americas (Cumulative Cases 2018-2023 and Cases per year 2013-2017). Last accessed 01 Aug 2023.14 Geographical expansion of cases of dengue and chikungunya beyond the historical areas of transmission in the Region of the Americas ( Attachment 2025_06_05_VLA1553-221_6M_Persistence_Data_PR_EN_FinalError in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
