CDW Corporation CDW continues to execute a disciplined capital allocation strategy focused on supporting long-term growth while returning capital to shareholders. The company supplements organic growth through acquisitions that expand its capabilities across key technology areas. Previous acquisitions, including Mission Cloud Services, Enquizit, Sirius Computer Solutions and Lexicon Tech Solutions, have strengthened CDW's cloud, managed services and lifecycle offerings, enabling it to address evolving customer priorities. On the last earnings call, management stated that it continues to evaluate merger and acquisition opportunities that can accelerate its three-part growth strategy while maintaining flexibility within its capital structure.
The company also continues to generate strong cash flow that supports its shareholder-return strategy. During the first quarter of 2026, CDW generated adjusted free cash flow of $251 million, representing 85% of non-GAAP net income and remaining within its long-term objective of converting 80% to 90% of non-GAAP net income into cash. The company utilized this cash in line with its 2026 capital allocation objectives by returning $201 million through share repurchases and $81 million through dividends, bringing total capital returned to shareholders to $282 million, or 112% of adjusted free cash flow during the quarter.
Management remains committed to maintaining net leverage within its targeted range of 2x to 3x while proactively managing liquidity. At the end of the first quarter, net leverage was 2.5x, within the company's target range. CDW also reiterated that dividend growth remains its first capital allocation priority, targeting a payout ratio of approximately 25% of non-GAAP net income, while share repurchases and acquisitions continue to serve as important drivers of shareholder value.
In addition to its capital deployment strategy, CDW expects productivity initiatives under its Geared for Growth program to begin contributing benefits in the second half of 2026. The multi-year initiative is designed to simplify operations, modernize processes and embed AI across the business. Management has identified expected annual run-rate improvements of $100 million to $200 million through 2027 and 2028, with a portion of the savings being reinvested to support the company's broader growth strategy and future investment capacity. Separately, in May 2026, CDW's board authorized an additional $1 billion for share repurchases, increasing the company's remaining buyback authorization as of March 31, 2026, to approximately $1.48 billion subject to future board approvals.
Taking a Look at CDW’s Competitors
TD SYNNEX Corporation SNX maintains a balanced capital allocation strategy through shareholder returns while supporting business growth. In fiscal 2025, the company returned $742 million to shareholders, including $596 million through share repurchases and $146 million in dividends. In the second quarter of fiscal 2026, it returned $151 million, comprising $112 million of share buybacks and $39 million of dividends. During the first half of fiscal 2026, TD SYNNEX repurchased $192 million of shares and paid $77 million in dividends. The company stated that this shareholder return policy reflects its financial strength and expectations of generating sufficient earnings and distributable cash flows.
Accenture plc ACN follows a disciplined capital allocation strategy, balancing acquisitions, investments and shareholder returns. In fiscal 2025, the company invested $1.5 billion across 23 acquisitions, including Avanseus, RANGR Data, Decho and IAMConcepts, to expand capabilities across AI, data, engineering and identity and access management. At the end of the third quarter of fiscal 2026, Accenture held $10.2 billion in cash and cash equivalents against $5 billion in long-term debt, while generating $3.8 billion in operating cash flow and $3.6 billion in free cash flow. The company also maintained its consistent dividend payments, distributing $3.7 billion in fiscal 2025.
CDW Price Performance, Valuation and Estimates
Shares of CDW have gained 5.2% in the past month compared with the Computers - IT Services industry’s growth of 1.7%.
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Valuation-wise, CDW seems attractive, as suggested by the Value Score of B. CDW trades at a forward 12-month price-to-earnings (P/E) ratio of 12.04, below the industry’s 16.94.
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The Zacks Consensus Estimate for CDW’s earnings for 2026 has been revised marginally upward over the past 60 days.
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CDW currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).