CDW (CDW) Valuation: How Strong Earnings, Shopify Partnership, and Buybacks Shape the Latest Outlook

CDW (CDW) just reported a strong quarter, surpassing earnings estimates and showing solid revenue gains, largely thanks to a surge in demand for cloud solutions and cybersecurity services. At the same time, management announced a partnership with Shopify designed to expand their footprint in retail tech, and they are continuing with share repurchases even as margins feel some pressure. For investors, there is a lot happening here: growth in key IT segments, strategic moves in retail, and signals of shareholder-friendly policies all in a single set of updates.

Even with this run of upbeat news, CDW’s stock has not reflected these developments in its longer-term performance. The share price fell nearly 24% over the past year, with momentum still struggling to rebound, though there have been small upward moves in the past month. These latest results and partnerships follow a challenging year and fit into a series of efforts to deepen the company’s relevance in the evolving tech landscape.

The real question is whether this recent boost signals the start of a turnaround for CDW or if the market has already priced in all of this potential growth.

Most Popular Narrative: 20.6% Undervalued

According to the most widely followed narrative, CDW appears undervalued by a significant margin based on analyst forecasts and core financial assumptions.

Expansion of CDW's software, professional, and managed services capabilities, now core to both strategy and recent M&A focus, continues to elevate recurring revenue and expand margins. This supports resilient long-term earnings growth. Sustained digital transformation and hybrid IT investments across commercial, healthcare, international, and state/local government clients are broadening CDW's addressable market and dampening exposure to cyclical volatility. This drives revenue stability and increases the company's premium over baseline IT market growth rates.

Want to learn why analysts think CDW should be trading much higher? Discover which bold growth assumptions power this undervaluation call and see if CDW’s earnings path might surprise you. The key drivers behind this narrative could shift how you view the stock’s future potential. Curious what they are?

Result: Fair Value of $206.80 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent challenges in education funding and shrinking gross margins could quickly undermine these bullish forecasts for CDW. This makes caution warranted.

Find out about the key risks to this CDW narrative.

Another View: SWS DCF Model Analysis

Meanwhile, our DCF model also points to CDW being undervalued. This supports the findings from the multiples approach. Does using both methods together make a stronger case for CDW, or is there something the models might overlook?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CDW for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own CDW Narrative

If you see things differently, or want to dive into the numbers to form your own perspective, you can put together your own outlook in just a few minutes: Do it your way.

A great starting point for your CDW research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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