CDW CDW Corporation
A high-quality IT middleman, but only a narrow-moat compounder.
The business
CDW is a large IT solutions provider and value-added reseller, helping businesses, government, education, and healthcare customers buy, configure, finance, and manage hardware, software, cloud, security, and services. It makes money from product resale margins, vendor incentives, and higher-margin services layered onto customer procurement relationships. The business is understandable, but demand is tied to enterprise IT refresh cycles and vendor ecosystems.
Quality gate · 74/100
Moat & management
| Moat | narrow moat |
| Source | scale |
| Trajectory | stable |
| Management | adequate |
CDW benefits from scale, procurement breadth, vendor relationships, sales expertise, and embedded customer workflows, but it is not protected by a true network effect or hard lock-in. Customers can switch resellers, and large vendors or cloud platforms can pressure margins, so the moat is real but not impregnable.
Capital allocation has been sensible overall: strong free-cash-flow conversion, moderate buybacks, and leverage that is elevated but manageable. Acquisitions and debt require discipline, and buybacks should be judged against valuation rather than used mechanically.
Owner-earnings inputs
| Owner earnings (TTM) | 1.08B |
| Owner-earnings yield | 6.0% |
| Free-cash-flow yield | 6.0% |
| Growth used (normalized) | 4.0% |
| Market-implied growth (reverse DCF) | 2.3% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 9.0% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 1.12B | 4.0% | 1.03B |
| 2 | 1.16B | 3.9% | 978.68M |
| 3 | 1.21B | 3.8% | 931.79M |
| 4 | 1.25B | 3.7% | 886.20M |
| 5 | 1.30B | 3.6% | 841.94M |
| 6 | 1.34B | 3.4% | 799.03M |
| 7 | 1.38B | 3.3% | 757.49M |
| 8 | 1.43B | 3.2% | 717.33M |
| 9 | 1.47B | 3.1% | 678.58M |
| 10 | 1.52B | 3.0% | 641.23M |
Key risks
- Margin pressure from vendors, hyperscalers, and competing resellers
- Cyclical enterprise hardware and software spending downturns
- Leverage reducing flexibility if earnings weaken
Catalysts
- AI infrastructure and security spending flowing through enterprise customers
- Commercial PC and device refresh cycle
- Continued share gains from smaller resellers through scale and service breadth
Recent news
score · 8 articles
- 1 Cash-Producing Stock with Solid Fundamentals and 2 Facing Challenges
- Is this the Best Time to Buy CDW Corporation (CDW)?
- Can AI Infrastructure Demand Fuel CDW's Growth in 2026?
- Why Is CDW (CDW) Stock Rocketing Higher Today
- CDW Stock Jumps Nearly 6% — Why Morgan Stanley Is Growing More Optimistic On This IT Play
- Morgan Stanley lifts server market TAM to $809B, boosts targets on compute stocks
- Morgan Stanley upgrades CDW on stronger AI-driven server demand
- Pzena Focused Value Strategy Added CDW Corporation (CDW) Amid Misplaced AI Concerns
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~2%/yr owner-earnings growth over 10y (reverse DCF); model credits 4%.