Since January 2025, CDW has been in a holding pattern, posting a small loss of 2.2% while floating around $177.36. The stock also fell short of the S&P 500’s 5.3% gain during that period.

Is now the time to buy CDW, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Do We Think CDW Will Underperform?

We're cautious about CDW. Here are three reasons why you should be careful with CDW and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, CDW’s sales grew at a sluggish 2.9% compounded annual growth rate over the last five years. This fell short of our benchmarks.

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect CDW’s revenue to rise by 2.1%. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.

3. EPS Growth Has Stalled Over the Last Two Years

Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.

CDW’s flat EPS over the last two years was weak. On the bright side, this performance was better than its 3.5% annualized revenue declines.

Final Judgment

We cheer for all companies making their customers lives easier, but in the case of CDW, we’ll be cheering from the sidelines. With its shares lagging the market recently, the stock trades at 18.1× forward P/E (or $177.36 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. Let us point you toward one of Charlie Munger’s all-time favorite businesses.

Stocks We Like More Than CDW

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