Market Analysis: CDW And 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 thoroughly analyzing CDW, we can discern the following trends:

• Notably, the current Price to Earnings ratio for this stock, 27.88, is 1.84x above the industry norm, reflecting a higher valuation relative to the industry.

• With a Price to Book ratio of 16.53, which is 8.43x 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 1.4, which is 2.75x the industry average, the stock might be considered overvalued based on sales performance.

• The company has a higher Return on Equity (ROE) of 18.43%, which is 15.5% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

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

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

• With a revenue growth of -9.45%, which is much lower than the industry average of -6.39%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

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:

• Compared to its top 4 peers, CDW has a higher debt-to-equity ratio of 3.24, indicating a higher level of debt financing.

• This higher debt proportion can expose the company to increased financial risk and potential challenges.

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.