Critical Survey: CDW (NASDAQ:CDW) versus Wipro (NYSE:WIT)

CDW (NASDAQ:CDW) and Wipro (NYSE:WIT) are both large-cap computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Dividends

CDW pays an annual dividend of $2.52 per share and has a dividend yield of 2.3%. Wipro pays an annual dividend of $0.12 per share and has a dividend yield of 6.0%. CDW pays out 30.7% of its earnings in the form of a dividend. Wipro pays out 85.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CDW has raised its dividend for 10 consecutive years.

Risk & Volatility

CDW has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, Wipro has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.

Profitability

This table compares CDW and Wipro’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CDW	4.70%	49.67%	8.02%
Wipro	14.25%	14.97%	9.68%

Valuation & Earnings

This table compares CDW and Wipro”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CDW	$22.42 billion	0.63	$1.07 billion	$8.22	13.48
Wipro	$9.87 billion	2.13	$1.41 billion	$0.14	14.32

Wipro has lower revenue, but higher earnings than CDW. CDW is trading at a lower price-to-earnings ratio than Wipro, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

93.2% of CDW shares are owned by institutional investors. Comparatively, 2.4% of Wipro shares are owned by institutional investors. 0.8% of CDW shares are owned by company insiders. Comparatively, 1.0% of Wipro shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for CDW and Wipro, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CDW	0	5	2	1	2.50
Wipro	1	2	0	0	1.67

CDW currently has a consensus target price of $142.14, indicating a potential upside of 28.26%. Given CDW’s stronger consensus rating and higher possible upside, equities research analysts plainly believe CDW is more favorable than Wipro.

Summary

CDW beats Wipro on 11 of the 18 factors compared between the two stocks.

About CDW

CDW Corporation provides information technology (IT) solutions in the United States, the United Kingdom, and Canada. It operates through three segments: Corporate, Small Business, and Public. The company offers discrete hardware and software products and services, as well as integrated IT solutions, including on-premise and cloud capabilities across hybrid infrastructure, digital experience, and security. It also provides hardware products comprising notebooks/mobile devices, tablets, network communications, desktop computers, collaboration, data storage and servers, and others; and software products, such as cloud solutions, software assurance, application suites, security, virtualization, operating systems, and network management. In addition, the company offers advisory and design, software development, implementation, managed, professional, configuration, partner, and telecom services, as well as warranties; delivers and manages mission critical software, systems, and network solutions; and implementation and installation, and repair services to its customers through various third-party service providers. It serves government, education, and healthcare customers; and small, medium, and large business customers. CDW Corporation was founded in 1984 and is headquartered in Vernon Hills, Illinois.

About Wipro

Wipro Limited operates as an information technology (IT), consulting, and business process services company worldwide. It operates through IT Services and IT Products segments. The IT Services segment offers IT and IT-enabled services, including digital strategy advisory, customer-centric design, technology and IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, cloud and infrastructure, business process, cloud, mobility and analytics, research and development, and hardware and software design services to enterprises. It serves customers in various industry sectors, such as communications, retail connectivity and services, consumer goods, healthcare, technology products and platforms, banking and financial services, energy, manufacturing and resources, capital markets and insurance, and hi-tech. The IT Products segment provides a range of third-party IT products comprising enterprise platforms, networking solutions, software and data storage products, contact center infrastructure, enterprise security, IT optimization technologies, video solutions, and end-user computing solutions. It serves enterprises in various industries primarily in the Indian market, which comprise the government, defense, IT and IT-enabled services, telecommunications, manufacturing, utilities, education, and financial services sectors. The company was incorporated in 1945 and is based in Bengaluru, India.