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As CDW Corporation (NASDAQ:CDW) released its earnings announcement on 31 March 2019, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 6.7% next year compared with the higher past 5-year average growth rate of 23%. With trailing-twelve-month net income at current levels of US$643m, we should see this rise to US$686m in 2020. Below is a brief commentary around CDW’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The view from 9 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of CDW’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 6.8% based on the most recent earnings level of US$643m to the final forecast of US$643m by 2022. This leads to an EPS of $5.8 in the final year of projections relative to the current EPS of $4.26. Margins are currently sitting at 4.0%, approximately the same as previous years. With analysts forecasting revenue growth of and CDW’s net income growth expected to roughly track that, this company may add value for shareholders over time.
Future outlook is only one aspect when you’re building an investment case for a stock. For CDW, I’ve compiled three pertinent factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is CDW worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CDW is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CDW? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.