CDW Corporation CDW
CDW remains a hold after Q2 2026 results confirmed the core tension: revenue is accelerating — Q2 sales rose roughly 10% YoY to $6.6B on AI and infrastructure demand — but gross margin missed Street estimates and shares dropped 14% premarket on August 5. FY2025 operating income of $1.656B has been essentially flat for three consecutive years while free cash flow has declined from $1.45B (2023) to $1.09B (2025), and operating margin compressed from 7.86% to 7.38%.
At 16.4x P/E the stock trades at a modest discount to the peer median of 17.3x, but EV/EBITDA of 12.7x sits at a 14.7% premium, pricing in operating leverage the P&L has not delivered. Smart money is improving (SM score 0.071 as of Q2 2026) but insiders are net sellers ($18.2M net disposition over 24 months), and the MACD histogram has turned negative as of August 19.
What could go wrong
- Margin compression persists. FY2025 gross margin fell to 21.73% from 21.92% and operating margin to 7.38% from 7.86%; Q2 2026 gross margin missed estimates, with hardware sales up 10% YoY but service revenues stagnating, deepening the mix shift toward lower-margin hardware.
- Free cash flow deterioration. FCF has declined for two straight years from $1.45B (2023) to $1.09B (2025) while total debt rose to $6.33B, constraining financial flexibility and buyback capacity.
- EPS growth reliant on buybacks. FY2025 EPS grew only 1.4% while net income fell 1.0% YoY; Q2 2026 EPS upside was similarly driven by a 3.5% share count reduction rather than core operating improvement.
- Insider selling acceleration. Over the trailing 24 months insiders net disposed $18.2M of stock; most recently Elizabeth Connelly sold 26,695 shares at $137.62 on August 7, 2026, shortly after the Q2 margin miss.
What would change my mind
Where this comes from: FMP annual fundamentals, FY2025 · derived_metrics, FY2025 vs FY2024 · FMP annual fundamentals, FY2023–FY2025 · Reuters and Zacks news articles, 2026-08-05. Orin's read on CDW; not advice.
Twelve months actual closes to 2026-09-23 · actual filings
50-day average 200-day average · volume below
On file
All CDW filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| Vanguard Capital Management | $1.2B | 0.0% of fund |
| Vanguard Portfolio Management | $1.2B | 0.1% of fund |
| State Street | $812.9M | 0.0% of fund |
| Harris Associates L P | $779.6M | 1.0% of fund |
| Geode Capital Management | $547.5M | 0.0% of fund |
| Hotchkis & Wiley Capital Management | $531.3M | 1.5% of fund |
88 filers · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 179 Form 4 filings, net −$17.9M. Of the 50 on hand, 2 were open-market purchases and 1 a sale— the rest are grants, option exercises and tax withholding.
Ask Orin about CDW
Orin answers questions about CDW from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →Where it trades
| Metric | Now | Own median | Sector |
|---|---|---|---|
| P/E | 17.5× | 21.7× | 53.3× |
| EV/EBITDA | 13.3× | 14.9× | — |
| P/S | 0.79× | 1.11× | — |
| P/B | 7.6× | 15.0× | — |
Its P/E sits 20th percentile of its own last 5 years (−1.31σ from its own mean).
5.6%
free-cash-flow growth every year for 10 years, discounted at 10%, is what today’s price implies — starting from $1.1B of trailing free cash flow. It is an assumption the market is making, not a forecast Orin is making.
What Wall Street published
$150
$130 – $171 · +4% against today's price
- 13 buy or overweight
- 5 hold
- 0 underweight or sell
The analysts’ consensus and their own ratings, not Orin’s. A target is a twelve-month opinion published by the firm that wrote it.
Against the companies it is compared to
| Company | Market cap | P/E | EV/EBITDA | Gross | Net | ROE |
|---|---|---|---|---|---|---|
| CDWCDW Corporation | $19B | 17.5× | 13.3× | 21.4% | 4.6% | 43% |
| CPAYCorpay, Inc. | $26B | 23.7× | 13.7× | 73.3% | 22.7% | 30% |
| GDDYGoDaddy Inc. | $13B | 14.2× | 11.0× | 63.8% | 17.8% | 661% |
| ITGartner, Inc. | $12B | 16.0× | 10.3× | 68.9% | 12.0% | 401% |
| LDOSLeidos Holdings, Inc. | $16B | 11.5× | 9.4× | 17.4% | 7.9% | 28% |
| ONON Semiconductor Corporation | $29B | 46.9× | 23.6× | 37.4% | 10.2% | 8% |
| UMCUnited Microelectronics Corporation | $62B | 23.9× | 12.5× | 30.6% | 33.3% | 21% |
The median is of the 6 peers listed above and nothing else — check it against the column. This company trades 11.9% below it. The peer set is the vendor’s, so a company can appear here that a person would not have chosen.
What it has traded at
What its sector has traded at
Two scales, drawn separately on purpose: a sector median and one company’s multiple are not the same number and putting them on one axis invites a comparison neither series supports.
Discounted cash flow
| Model | Fair value | Against | Computed |
|---|---|---|---|
| Standard DCF | $166 | $131.27 · +26% | 2026-06-10 |
| Levered DCF | $168 | $131.27 · +28% | 2026-06-10 |
The vendor’s intrinsic-value models. Treat them as a low-growth anchor — for a fast grower the market routinely pays well above a DCF. These were computed against the price in the “against” column, not today’s.
Every estimate on one scale
The vertical rule is the current price. Ranges and point estimates are the backend’s, published as they were calculated; an arrow means the estimate sits beyond this scale, and its number is on the right.