CDW Corp (CDW) stock analysis

P/E below its 5-year median

CDW's P/E of 20.2 is below its own 5-year median of 23.4.

P/E above the industry

CDW's P/E of 20.2 is above the Nonstore Retailers median of 20.2.

EV/EBITDA below its 5-year median

CDW's EV/EBITDA of 13.4 is below its 5-year median of 15.8.

P/B above the industry

CDW's price-to-book of 8.21 is above the Nonstore Retailers median of 3.15.

Trading below fair value

The share price of $173.08 is below our fair value estimate of $188.35.

Margin of safety under 20%

The price is 8.1% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -1.9% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -0.2% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 4.5% over the last twelve months, against a 5-year average of 6.2% a year.

Growing faster than the industry

Revenue grew 10.9% over the last twelve months; the Nonstore Retailers median is 5.9%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 21.0% over the last twelve months, against 21.6% a year earlier.

Return on equity over 15%

Return on equity was 42.5% over the last twelve months and averaged 69.6% over five years.

Return on capital over 10%

Return on invested capital was 16.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

CDW's return on equity of 42.5% is above the Nonstore Retailers median of 1.4%.

Earnings grew over 5 years

Net income grew 6.2% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 4.5% over the last twelve months, against a 5-year average of 4.9%.

Net margin above the industry

CDW's net margin of 4.5% is above the Nonstore Retailers median of -0.2%.

High debt

Debt is 270% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 303% five years ago to 270%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 14.8% of total debt; we look for at least 20%.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.26 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.36; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

CDW paid dividends worth 1.5% of the share price over the last twelve months.

Yield below Treasuries

The 1.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; CDW yields 1.5%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 29.2% of net income.

Covered by free cash flow

Dividends take 34.4% of free cash flow.