Industry Comparison: Evaluating CDW Against Competitors In Electronic Equipment, Instruments & Components Industry

In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating CDW CDW against its key competitors in the Electronic Equipment, Instruments & Components industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.

CDW Background

CDW Corp is a value-added reseller operating in the U.S. (95% of sales) and Canada (5%). The company has more than 100,000 products on its line of cards that range from notebooks to data center software. Roughly half of CDW's revenue comes from midsize and large businesses, with the remaining from small businesses, government agencies, education institutions, and health-care organizations.

By conducting an in-depth analysis of CDW, we can identify the following trends:

• The Price to Earnings ratio of 26.53 for this company is 1.95x above the industry average, indicating a premium valuation associated with the stock.

• With a Price to Book ratio of 15.73, which is 8.99x the industry average, CDW might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.

• With a relatively high Price to Sales ratio of 1.33, which is 2.89x the industry average, the stock might be considered overvalued based on sales performance.

• The Return on Equity (ROE) of 18.43% is 15.5% above the industry average, highlighting efficient use of equity to generate profits.

• With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $540 Million, which is 3.6x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $1.23 Billion, which indicates 3.15x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company is witnessing a substantial decline in revenue growth, with a rate of -9.45% compared to the industry average of -6.39%, which indicates a challenging sales environment.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When assessing CDW against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

• CDW has a relatively higher debt-to-equity ratio of 3.24 compared to its top 4 peers.

• This could indicate a higher financial risk as the company is more reliant on borrowed funds, and investors may perceive it as a potential concern.

Key Takeaways

CDW's high PE, PB, and PS ratios suggest that the company is trading at a premium compared to its peers in the Electronic Equipment, Instruments & Components industry. This indicates that investors are willing to pay a higher price for CDW's earnings, book value, and sales. On the other hand, CDW's high ROE, EBITDA, gross profit, and low revenue growth indicate that the company is generating strong profitability and efficiency, but experiencing slower revenue growth compared to its industry peers.

This article was generated by Benzinga's automated content engine and reviewed by an editor.