CDW Corporation: Strong Execution, But Holding Off for Now

CDW Corporation is a leading US IT solutions provider, offering a range of products and services including endpoint devices, networking equipment, cloud subscriptions, security tools, and managed services. Despite strong execution, the author remains on the sidelines due to concerns about the company's stock valuation.

CDW Corporation (NASDAQ: CDW), a leading multi-brand provider of information technology (IT) solutions, has been facing significant challenges in the second quarter of 2025. Despite its robust product and service offerings, including endpoint devices, networking equipment, cloud subscriptions, security tools, and managed services, the company has experienced persistent weak operating trends. This article explores the key issues and market dynamics affecting CDW's performance.

Market Dynamics and Performance

CDW, as the largest IT reseller in North America, serves as an outsourced sales and marketing provider for hardware and software vendors. However, its business has been persistently weak due to a downturn in IT hardware spending, which accounts for roughly 50% of its gross profit [1]. The company's customer base, which skews towards smaller businesses, has also had to deal with higher interest rates and the lingering effects of IT spending from the COVID-19 period.

Financial Performance

In the first quarter of 2025, CDW reported net sales of $5.2 billion, an 8% increase on an average daily sales basis [2]. However, the stock has seen a significant decline, with a one-month return of 3.37% and a 24.81% loss over the last 52 weeks. On July 16, 2025, CDW Corporation stock closed at $175.73 per share with a market capitalization of $23.141 billion [2].

Investor Sentiment

Cooper Investors, an investment management firm, highlighted CDW in its second quarter 2025 investor letter, noting the company's position as an outsourced sales and marketing provider. However, the fund exited its investment in CDW earlier in the year due to persistent weak operating trends [1]. Despite this, CDW is not among the 30 Most Popular Stocks Among Hedge Funds, with only 44 hedge fund portfolios holding the stock at the end of the first quarter [2].

Recent Shareholder Activity

Florida Financial Advisors LLC reduced its stake in CDW by 55.7% in the first quarter, selling 1,683 shares and leaving it with 1,341 shares [4]. Other institutional investors, such as Orion Capital Management LLC and Optiver Holding B.V., have also made notable changes to their holdings in CDW, indicating varying levels of confidence in the company's prospects.

Conclusion

While CDW Corporation continues to navigate the complexities of the IT market, its stock valuation remains a concern for investors. The company's strong execution in offering a broad array of IT solutions is commendable, but the persistent downturn in IT hardware spending and higher interest rates pose significant challenges. Investors should closely monitor CDW's ability to adapt to these market conditions and its potential for growth in other areas, such as cloud and managed services.

References

[1] https://www.builtinchicago.org/company/cdw
[2] https://au.finance.yahoo.com/news/why-cdw-corporation-cdw-declined-115706767.html
[3] https://finance.yahoo.com/news/why-cdw-corporation-cdw-declined-115706767.html
[4] https://www.marketbeat.com/instant-alerts/filing-florida-financial-advisors-llc-trims-stake-in-cdw-corporation-nasdaqcdw-2025-07-15/