At US$175, Is It Time To Put CDW Corporation (NASDAQ:CDW) On Your Watch List?

CDW Corporation (NASDAQ:CDW) has been making waves in the technology industry, with its stock price reaching US$175. As an investor, you might be wondering if it's time to add CDW to your watch list. This article explores the company's current performance, market position, and growth strategies to help you make an informed decision.

CDW's current P/E ratio of 17.5 is lower than its industry peers' average of 21.5 and its 5-year historical average of 19.5. This suggests that CDW is relatively undervalued compared to its peers and its own historical performance. However, it's essential to consider other factors before making an investment decision.



CDW's projected earnings growth rate of 12.5% outpaces competitors like Insight Enterprises (NASDAQ:NSIT) at 9.5% and World Wide Technology (WWT) at 10%. This strong earnings growth is driven by CDW's diversified technology offerings and robust customer base. The company's focus on recurring revenue and managed services has also contributed to its impressive financial performance.

CDW's return on equity (ROE) and return on assets (ROA) have shown a consistent upward trend over the past five years. In 2017, CDW's ROE was 11.2%, which increased to 16.5% in 2021. Similarly, ROA rose from 4.5% in 2017 to 7.2% in 2021. This improvement reflects CDW's effective management and strategic initiatives, indicating a strong financial performance.



CDW differentiates itself from competitors by focusing on technology solutions and services rather than hardware sales. This strategy allows CDW to provide tailored solutions to clients, catering to their evolving needs. The company's expertise in cloud services, data center optimization, and security solutions enables it to maintain its relevance in an increasingly digital world.

CDW's business model has adapted to meet the evolving needs of its clients, particularly in the face of emerging technologies and changing market trends. The company has expanded its offerings to include cloud services, data analytics, and cybersecurity solutions, in addition to its traditional IT hardware and software products. This diversification has allowed CDW to maintain its relevance and tap into new revenue streams.

CDW's market position and growth strategies compare favorably to other major IT service providers and retailers like Dell Technologies (NYSE:DELL) and Best Buy (NYSE:BBY). CDW's revenue growth has been steady, with a CAGR of 6.5% from 2017 to 2021, reaching US$18.4 billion. Its focus on recurring revenue and managed services has driven its growth, with recurring revenue accounting for 45% of total revenue in 2021, up from 38% in 2017.

CDW's gross margin has been consistently higher than that of Dell Technologies and Best Buy. In 2021, CDW's gross margin was 18.7%, compared to 17.4% for Dell Technologies and 12.1% for Best Buy. This indicates that CDW has a more profitable business model, which could lead to higher earnings and shareholder returns.

In conclusion, CDW's current P/E ratio, strong earnings growth, and improving ROE and ROA suggest that the company is undervalued and performing well. Its focus on technology solutions and services differentiates it from competitors, and its adaptable business model allows it to meet the evolving needs of its clients. With a market position and growth strategies that compare favorably to its peers, CDW is a company worth watching. As an investor, you may want to consider adding CDW to your watch list at its current stock price of US$175.