CDW shares drop 40% since July despite 9% revenue growth; cautious 2026 outlook due to supply issues.

CDW Corporation's stock has fallen nearly 40% since last July, significantly underperforming the S&P 500. In Q1 2026, the company reported a 9% year-over-year revenue increase to $5.68 billion, but gross margins shrank, especially in the Government segment, which pressured the stock after earnings. Management remains cautious about 2026 guidance due to supply chain variability and memory constraints, despite growth across most segments. A free cash flow model suggests CDW is trading at a 38% discount to its fair value, with a long-term expected return near 16%.