Does CDW’s Share Price Weakness Present an Opportunity Ahead of 2025?

• If you are wondering whether CDW is starting to look like a bargain after a choppy run in tech, this article will walk through whether the current price actually lines up with the company’s fundamentals.
• CDW shares now trade around $143.08, down 4.5% over the last week and 15.9% year to date, but still up 17.5% over 5 years, which hints at a solid long term story despite recent weakness.
• Recent sentiment around IT spending, cloud infrastructure rollouts and enterprise digital transformation has put solutions providers like CDW back in focus, as investors weigh how resilient corporate tech budgets really are. At the same time, ongoing discussions about AI driven infrastructure demand and vendor consolidation have added both excitement and uncertainty to how markets are pricing CDW’s future growth.
• On our simple valuation checks, CDW scores a 4 out of 6, suggesting it screens as undervalued on several metrics but not all. In this article, we will unpack what that means across different valuation approaches, and then finish with a more holistic way of thinking about CDW’s worth beyond the numbers alone.

Find out why CDW's -16.2% return over the last year is lagging behind its peers.

Approach 1: CDW Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and discounting those cash flows back to today in dollars.

For CDW, the latest twelve month Free Cash Flow is about $986.8 million. Analysts provide explicit forecasts for the next few years, including $1.09 billion in 2026 and $1.2 billion in 2027. Later years are extrapolated by Simply Wall St using gradually slowing growth assumptions. By 2035, Free Cash Flow is projected to reach roughly $1.74 billion, with each future year discounted to reflect risk and the time value of money.

Adding up these discounted cash flows gives an estimated intrinsic value of $161.83 per share based on a 2 Stage Free Cash Flow to Equity model. Compared with the recent market price around $143.08, the model suggests CDW is trading at an 11.6% discount. On this cash flow basis, the stock screens as modestly undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CDW is undervalued by 11.6%. Track this in your watchlist or portfolio, or discover 916 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for CDW.

Approach 2: CDW Price vs Earnings

For a consistently profitable business like CDW, the Price to Earnings, or PE, ratio is a straightforward way to gauge how much investors are willing to pay today for each dollar of current earnings. In general, companies with stronger growth prospects and lower perceived risk tend to justify higher PE multiples, while slower growth or higher uncertainty usually means a lower, more conservative PE is appropriate.

CDW currently trades on a PE of about 17.7x. That is below the broader Electronic industry average of roughly 24.5x, and a bit above the peer group average of around 15.7x. Simply Wall St also calculates a proprietary “Fair Ratio” of 24.6x for CDW, which reflects what the PE should be given its earnings growth outlook, margins, industry, market cap and specific risk profile. This Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for the company’s own fundamentals rather than assuming all businesses in the sector deserve the same multiple.

Comparing CDW’s actual 17.7x PE to the 24.6x Fair Ratio suggests the shares are trading at a meaningful discount to what its fundamentals might justify.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1455 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your CDW Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce Narratives, a simple way to attach your story about CDW to the numbers by spelling out how you think its revenue, earnings and margins will evolve. This turns that story into a financial forecast and, ultimately, a fair value estimate you can compare with today’s share price.

On Simply Wall St’s Community page, millions of investors use Narratives as an easy, guided tool to do exactly this. Narratives update dynamically as new information like earnings or news arrives, so your fair value view stays in sync with the latest data rather than a static spreadsheet.

For CDW, one investor might build a more optimistic Narrative that leans into long term software and services growth, higher margins and a fair value closer to $235 per share. Another might focus on macro risks, softer IT spending and more conservative assumptions that pull fair value down toward $176. By comparing each Narrative’s fair value to the current market price, they can decide whether CDW looks like a buy, a hold, or a sell based on the story they actually believe.

Do you think there's more to the story for CDW? Head over to our Community to see what others are saying!

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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