About: CDW is an IT reseller and solutions provider. It operates primarily in the US, serving small-to-medium sized businesses, government departments, educational and healthcare organisations. CDW is the largest operator in a highly fragmented market, giving it purchasing scale with suppliers that makes it an attractive partner for its customers.

CDW’s scale allows it’s sale force to be specialised by end market, bringing focus and industry-relevant product expertise.

Why it’s in the portfolio: Although they are quite different businesses, CDW shares a number of Accenture’s key competitive advantages – its scale, breadth and balance across end markets, and the fact that it is supplier-agnostic. This has led to similar outcomes: superior growth, long-tenured employees and an average customer relationship of 11 years. In a very fragmented US IT reseller market, CDW has a share of 5%, equal to its next four competitors combined. Like Accenture, CDW is a company with a driven culture. Management’s focus is on gaining market share, with the emphasis on profitable share. CDW’s internal target is to grow 2–3% faster each year than the US IT market and it has achieved this objective for many years.

Fundamentals: CDW has a market cap of $19b USD, a PE of 22x forward earnings, EPS of 6x forward earnings and a PEG ratio of around 1.5. The company currently has a 1.1% dividend yield and a 21.7% payout ratio. The company’s debt to assets are currently 44.8% and debt to equity is 329.0%.

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