Investigating CDW's Standing In Electronic Equipment, Instruments & Components Industry Compared To Competitors

In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating CDW CDW in relation to its major competitors in the Electronic Equipment, Instruments & Components industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in 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 carefully studying CDW, we can deduce the following trends:

• The Price to Earnings ratio of 26.88 for this company is 2.04x above the industry average, indicating a premium valuation associated with the stock.

• With a Price to Book ratio of 15.93, which is 9.37x 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.

• The Price to Sales ratio of 1.35, which is 3.07x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

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

• Compared to its industry, 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.

• 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 gauges the extent to which a company has financed its operations through debt relative to equity.

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.

In light of the Debt-to-Equity ratio, a comparison between CDW and its top 4 peers reveals the following information:

• 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.