Value
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.6 |
| P/S | 9.8 |
| EV/EBITDA | 5.1 |
| Fwd P/E | 9.1 |
| PEG | 5.1 |
| Analyst target | 4.0 |
- ▸Forward P/E: 11.4x
- ▸PEG: 1.47
CDW · Why this verdict
Why CDW (CDW) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceHIGH
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a debt-to-equity ratio of 2.4, a substantial portion of the company's cash flow is committed to servicing financial obligations, leaving reduced capacity to invest in growth, withstand a demand downturn, or return incremental capital to shareholders. Bear case | Debt-to-equity ratio falls below 1.5 over the next 4 quarters as free cash flow is directed toward debt reduction, easing the financial risk profile. | →Stable |
| CounterIT distribution businesses with relatively stable procurement volumes can sustainably carry higher leverage than cyclical businesses; if the company's revenue is largely tied to recurring enterprise refresh cycles, the leverage may represent a deliberate capital-structure choice rather than a stress indicator. | ||
With no identifiable competitive moat and thin operating margins, the business lacks a structural pricing advantage that would allow it to sustain returns through economic cycles, making the investment dependent on external demand conditions rather than intrinsic pricing power. Quality breakdown | Piotroski F-Score rises above 8 for 2 consecutive quarters, signaling a durable improvement in the underlying quality of financial outputs. | →Stable |
| CounterIT distribution businesses often operate on intentionally thin margins, with returns generated through volume scale and supplier rebate economics rather than traditional pricing power; the reported return on equity — even if partially flattered by a leveraged balance sheet — suggests the business model generates meaningful economic returns. | ||
A put/call ratio of 2.83 — more than twice the level typically considered neutral — indicates that institutional market participants are paying meaningful premiums to hedge against downside, suggesting informed money is skeptical of the current price level. Risk breakdown | Put/call ratio falls below 1.5 and remains there for 2 consecutive months, indicating the hedging overhang has cleared. | →Stable |
| CounterElevated put/call ratios can reflect mechanical hedging by large shareholders rather than directional bearishness; in a name with limited options liquidity, a single institutional hedge position could distort the ratio without reflecting broad market pessimism. | ||
Three of the past four quarters produced earnings beats with an average positive surprise, establishing a baseline of consistent execution; however, the most recent quarter produced a small miss, introducing uncertainty about whether the beat pattern will resume. Earnings | EPS beats consensus by more than 3% in at least 3 of the next 4 quarters, confirming that the most recent miss was an anomaly rather than the start of a deteriorating trend. | →Stable |
| CounterThe most recent miss was modest at -0.26%, and three consecutive beats before it suggest the execution track record remains broadly intact; a single quarter below consensus in a low-margin distribution business does not indicate structural deterioration. | ||
At a debt-to-equity ratio of 2.4, a substantial portion of the company's cash flow is committed to servicing financial obligations, leaving reduced capacity to invest in growth, withstand a demand downturn, or return incremental capital to shareholders.
→StableBear case
- Expectation
- Debt-to-equity ratio falls below 1.5 over the next 4 quarters as free cash flow is directed toward debt reduction, easing the financial risk profile.
CounterIT distribution businesses with relatively stable procurement volumes can sustainably carry higher leverage than cyclical businesses; if the company's revenue is largely tied to recurring enterprise refresh cycles, the leverage may represent a deliberate capital-structure choice rather than a stress indicator.
With no identifiable competitive moat and thin operating margins, the business lacks a structural pricing advantage that would allow it to sustain returns through economic cycles, making the investment dependent on external demand conditions rather than intrinsic pricing power.
→StableQuality breakdown
- Expectation
- Piotroski F-Score rises above 8 for 2 consecutive quarters, signaling a durable improvement in the underlying quality of financial outputs.
CounterIT distribution businesses often operate on intentionally thin margins, with returns generated through volume scale and supplier rebate economics rather than traditional pricing power; the reported return on equity — even if partially flattered by a leveraged balance sheet — suggests the business model generates meaningful economic returns.
A put/call ratio of 2.83 — more than twice the level typically considered neutral — indicates that institutional market participants are paying meaningful premiums to hedge against downside, suggesting informed money is skeptical of the current price level.
→StableRisk breakdown
- Expectation
- Put/call ratio falls below 1.5 and remains there for 2 consecutive months, indicating the hedging overhang has cleared.
CounterElevated put/call ratios can reflect mechanical hedging by large shareholders rather than directional bearishness; in a name with limited options liquidity, a single institutional hedge position could distort the ratio without reflecting broad market pessimism.
Three of the past four quarters produced earnings beats with an average positive surprise, establishing a baseline of consistent execution; however, the most recent quarter produced a small miss, introducing uncertainty about whether the beat pattern will resume.
→StableEarnings
- Expectation
- EPS beats consensus by more than 3% in at least 3 of the next 4 quarters, confirming that the most recent miss was an anomaly rather than the start of a deteriorating trend.
CounterThe most recent miss was modest at -0.26%, and three consecutive beats before it suggest the execution track record remains broadly intact; a single quarter below consensus in a low-margin distribution business does not indicate structural deterioration.
TrendMatrix Research · core thesis
Engine thesis — one sentence
A mostly consistent earnings performer in IT distribution carries leverage of 2.4 times debt-to-equity and an elevated put/call ratio signaling institutional hedging; with the stock already above its near-term resistance target and no identifiable competitive moat, the risk/reward geometry disfavors new positions.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 4.5 |
| Gross margin | 0.3 |
| Op margin | 2.6 |
| Net margin | 2.4 |
| Current ratio | 4.5 |
| FCF quality | 6.1 |
| Moat | 5.4 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 44%
- ▸No competitive moat
Growth
4.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.8 |
| EPS growth | 3.5 |
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 9.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 2.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.9 |
| Price target | 6.2 |
| erm sentiment | 5.6 |
- ▸Light analyst coverage (9.0) — signal dampened
Insider
5.3/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.5 |
| holder change | 5.1 |
- ▸Insider buying (low materiality) — $2,505,138 (0.015% of mkt cap)
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.3 |
| quality rank | 6.6 |
| growth rank | 6.1 |
- ▸Superior ROE vs peers
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.7 |
| support resistance | 4.8 |
| 52w position | 4.9 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.6 |
| days to cover | 6.0 |
| volatility | 2.0 |
| put call | 4.1 |
| implied vol | 4.5 |
| beta | 7.2 |
| debt equity | 2.6 |
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 4.1 |
| dividend safety | 7.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 189.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.9>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.7=NEGATIVE
Warning (1)
- DEATH_CROSS:momentum=6.9>=5.0 recovering
Reward-to-Risk
-0.70
Upside
-5.9%
Downside
8.4%
Sizing output
AVOID
SetupMomentum Cont — Trend continuation, RSI 52, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 6.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.7=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.70 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 6.9, Value at 6.6, and Sentiment at 6.3; the weakest are Growth at 4.2, Technical at 4.5, and Peer rank at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.70 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Leverage Limits Flexibility
Trip ifDebt-to-equity ratio falls below 1.5 for 2 consecutive quarters.
- P2Elevated Options Hedging Pressure
Trip ifPut/call ratio falls below 1.5 and remains there for 2 consecutive months.
- P3Earnings Execution With Recent Slip
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P4Absence Of Competitive Moat
Trip ifPiotroski F-Score rises above 8 for 2 consecutive quarters.