CDW Corporation (NASDAQ:CDW): Immense Growth Potential?
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The latest earnings update CDW Corporation (NASDAQ:CDW) released in December 2018 showed that the company benefited from a robust tailwind, leading to a double-digit earnings growth of 23%. Below, I've laid out key growth figures on how market analysts predict CDW's earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
See our latest analysis for CDW
Analysts' outlook for the coming year seems rather subdued, with earnings growing by a single digit 7.2%. The growth outlook in the following year seems much more buoyant with rates generating double digit 16% compared to today’s earnings, and finally hitting US$846m by 2022.
Although it is informative knowing the growth year by year relative to today’s value, it may be more valuable to analyze the rate at which the business is moving on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of CDW's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 8.0%. This means that, we can assume CDW will grow its earnings by 8.0% every year for the next couple of years.
Next Steps:
For CDW, I've compiled three pertinent factors you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is CDW worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CDW is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CDW? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
