In the rapidly evolving landscape of technology, two companies stand out for their distinct yet overlapping offerings: CDW Corporation and Palo Alto Networks, Inc. Both operate within the technology sector, focusing on IT solutions and cybersecurity, respectively. CDW excels in providing integrated IT services, while Palo Alto Networks leads in innovative cybersecurity solutions. This comparison will help you, the investor, discern which of these companies may be the more compelling addition to your portfolio.
Table of contents
Company Overview
CDW Overview
CDW Corporation, founded in 1984 and headquartered in Vernon Hills, Illinois, operates within the information technology services sector. The company is dedicated to providing a comprehensive range of IT solutions across the United States, the United Kingdom, and Canada. CDW serves various customer segments, including government, education, and healthcare, as well as small, medium, and large businesses. Its offerings encompass discrete hardware and software products, integrated IT solutions, and managed services, emphasizing cloud capabilities and cybersecurity. With a current market capitalization of approximately $18.8B, CDW stands as a significant player in the IT solutions market, driven by its commitment to delivering value through technology.
Palo Alto Networks Overview
Palo Alto Networks, Inc., established in 2005 and based in Santa Clara, California, specializes in cybersecurity solutions. The company provides an array of products, including firewall appliances, security management software, and cloud security services. It caters to a diverse clientele, from medium to large enterprises to government entities across multiple industries. With a market capitalization of around $127.1B, Palo Alto Networks is recognized as a leader in cybersecurity, focusing on threat prevention and advanced security analytics. The company’s innovative approach positions it as a critical player in safeguarding digital environments against evolving cyber threats.
Key similarities and differences
Both CDW and Palo Alto Networks operate within the technology sector but focus on distinct aspects. CDW emphasizes hardware, software, and IT solutions, while Palo Alto Networks is centered on cybersecurity. Both companies serve a broad range of clients, including government and healthcare sectors, but differ in their core offerings and market strategies.
Income Statement Comparison
In this section, I present a comparison of the income statements for CDW Corporation and Palo Alto Networks, Inc. for the most recent fiscal year, highlighting key financial metrics.
| Metric | CDW Corporation | Palo Alto Networks, Inc. |
|---|---|---|
| Market Cap | 18.78B | 127.12B |
| Revenue | 20.99B | 9.22B |
| EBITDA | 1.93B | 1.94B |
| EBIT | 1.65B | 1.60B |
| Net Income | 1.08B | 1.13B |
| EPS | 8.06 | 1.71 |
| Fiscal Year | 2024 | 2025 |
Interpretation of Income Statement
In 2024, CDW experienced a slight decline in revenue compared to the previous year, while Palo Alto Networks showed substantial growth in revenue from 8.03B in 2024 to 9.22B in 2025. Despite this, CDW maintained stable operating margins, with EBITDA margins hovering around 9.2%. The net income for CDW decreased from 1.10B in 2023 to 1.08B in 2024, reflecting a cautious approach to expense management. In contrast, Palo Alto Networks’ net income rose to 1.13B, indicating improved efficiency and successful cost control, contributing to a positive outlook for future growth.
Financial Ratios Comparison
The following table provides a comparative overview of the most recent financial ratios for CDW Corporation and Palo Alto Networks, Inc. This data can help investors assess the financial health and performance of these companies.
| Metric | CDW | Palo Alto Networks |
|---|---|---|
| ROE | 45.81% | 14.49% |
| ROIC | 13.13% | 5.67% |
| P/E | 21.61 | 101.43 |
| P/B | 9.90 | 14.70 |
| Current Ratio | 1.35 | 0.89 |
| Quick Ratio | 1.24 | 0.89 |
| D/E | 2.55 | 0.26 |
| Debt-to-Assets | 40.82% | 1.43% |
| Interest Coverage | 7.70 | 414.30 |
| Asset Turnover | 1.43 | 0.39 |
| Fixed Asset Turnover | 67.26 | 12.56 |
| Payout Ratio | 30.81% | 0% |
| Dividend Yield | 1.43% | 0% |
Interpretation of Financial Ratios
CDW’s ratios indicate strong performance, particularly in ROE and liquidity metrics, suggesting effective management and a solid financial position. In contrast, Palo Alto Networks shows high P/E and low current ratio, raising concerns about potential overvaluation and liquidity issues. Both companies exhibit unique strengths and weaknesses that investors should consider based on their risk tolerance and investment strategy.
Dividend and Shareholder Returns
CDW Corporation (CDW) pays dividends with a notable annual yield of approximately 1.43% and a payout ratio around 30.8%, indicating a sustainable distribution supported by strong free cash flow. The company also engages in share buybacks, which can enhance shareholder value. Conversely, Palo Alto Networks, Inc. (PANW) does not pay dividends as it prioritizes reinvestment for growth and development, which is typical for companies in high-growth phases. While it conducts share repurchases, this strategy may align well with long-term value creation, given its ambition for expansion. Overall, both strategies reflect different approaches to enhancing shareholder value.
Strategic Positioning
In the competitive landscape of the technology sector, CDW Corporation holds a market cap of approximately 18B, focusing on IT solutions across various segments. Its diverse offerings face competitive pressure from Palo Alto Networks, which boasts a significant market cap of around 127B in cybersecurity. The shift towards integrated solutions and cybersecurity presents a technological disruption, pushing CDW to innovate and adapt. As market dynamics evolve, both companies must strategically position themselves to capture market share and respond to emerging threats and opportunities.
Stock Comparison
In this section, I will evaluate the weekly stock price movements for CDW Corporation (CDW) and Palo Alto Networks, Inc. (PANW) over the past year, highlighting key price fluctuations and trading dynamics.
Trend Analysis
CDW Corporation (CDW) Over the past year, CDW’s stock has experienced a percentage change of -32.62%, indicating a bearish trend. The stock has seen notable highs of 255.78 and lows of 140.2, with a standard deviation of 32.3 suggesting significant volatility. The recent trend from September 14, 2025, to November 30, 2025, shows a further decline of -12.22%, with a trend slope of -2.03, reflecting a deceleration in the downward movement.
Palo Alto Networks, Inc. (PANW) Conversely, PANW’s stock has demonstrated a percentage increase of 34.4% over the same period, marking a bullish trend. The stock reached a high of 220.24 and a low of 134.51, with a standard deviation of 20.21, indicating moderate volatility. However, in the recent analysis period from September 14, 2025, to November 30, 2025, PANW’s stock has shown a minor decline of -3.14%, with a trend slope of -0.72, suggesting a deceleration in momentum despite the overall positive performance.
In summary, CDW is currently in a bearish phase with declining trends, while PANW remains bullish overall, though it has experienced a slight recent downturn.
Analyst Opinions
Recent recommendations for CDW Corporation (CDW) suggest a “Buy” rating with a solid B+ score, primarily due to strong return on equity (5) and discounted cash flow performance (4). Analysts highlight its robust financial health, underlined by a low debt-to-equity ratio (1). Conversely, Palo Alto Networks, Inc. (PANW) holds a “Hold” rating at B, with similar scores across key metrics, but concerns about its price-to-earnings ratio (1) limit upside potential. The consensus for CDW is a “Buy,” while PANW remains a cautious “Hold.”
Stock Grades
As we analyze the latest stock grades for CDW Corporation and Palo Alto Networks, Inc., we can identify significant trends that may influence investment decisions.
CDW Corporation Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Raymond James | upgrade | Strong Buy | 2025-11-25 |
| Barclays | maintain | Equal Weight | 2025-11-05 |
| UBS | maintain | Buy | 2025-11-05 |
| Evercore ISI Group | maintain | Outperform | 2025-10-20 |
| UBS | maintain | Buy | 2025-08-07 |
| Barclays | maintain | Equal Weight | 2025-08-07 |
| JP Morgan | maintain | Neutral | 2025-07-17 |
| Citigroup | maintain | Neutral | 2025-07-11 |
| UBS | maintain | Buy | 2025-05-08 |
| Barclays | maintain | Equal Weight | 2025-05-08 |
Palo Alto Networks, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Goldman Sachs | maintain | Buy | 2025-11-21 |
| HSBC | downgrade | Reduce | 2025-11-21 |
| BTIG | maintain | Buy | 2025-11-20 |
| Cantor Fitzgerald | maintain | Overweight | 2025-11-20 |
| Rosenblatt | maintain | Buy | 2025-11-20 |
| UBS | maintain | Neutral | 2025-11-20 |
| Needham | maintain | Buy | 2025-11-20 |
| WestPark Capital | maintain | Hold | 2025-11-20 |
| Oppenheimer | maintain | Outperform | 2025-11-20 |
| Bernstein | maintain | Outperform | 2025-11-20 |
In summary, CDW Corporation has experienced an upgrade to a “Strong Buy,” reflecting growing confidence among analysts. Conversely, while Palo Alto Networks maintains a mix of “Buy” and “Hold” ratings, the downgrade from HSBC to “Reduce” indicates some caution surrounding its stock. Overall, the trend suggests a favorable outlook for CDW, while Palo Alto Networks might warrant closer attention given the recent mixed evaluations.
Target Prices
The current target consensus for CDW Corporation and Palo Alto Networks, Inc. indicates positive expectations from analysts.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| CDW Corporation | 190 | 148 | 174.33 |
| Palo Alto Networks, Inc. | 250 | 157 | 228.83 |
For CDW Corporation, the consensus target price of 174.33 is above its current price of 144.22, suggesting potential upside. Similarly, Palo Alto Networks has a target consensus of 228.83, well above its current price of 190.09, indicating strong analyst confidence in both stocks.
Strengths and Weaknesses
The following table summarizes the strengths and weaknesses of CDW Corporation and Palo Alto Networks, Inc. based on their most recent performance metrics.
| Criterion | CDW Corporation | Palo Alto Networks, Inc. |
|---|---|---|
| Diversification | Moderate | High |
| Profitability | Moderate | High |
| Innovation | Moderate | High |
| Global presence | Moderate | Strong |
| Market Share | Moderate | High |
| Debt level | High | Low |
Key takeaways: CDW shows moderate performance across most criteria with higher debt levels, while Palo Alto Networks demonstrates strong innovation and market presence with a solid profitability profile and minimal debt risk.
Risk Analysis
The table below outlines the key risks associated with each company.
| Metric | CDW Corporation | Palo Alto Networks, Inc. |
|---|---|---|
| Market Risk | Moderate | High |
| Regulatory Risk | Low | Moderate |
| Operational Risk | Moderate | High |
| Environmental Risk | Low | Low |
| Geopolitical Risk | Moderate | High |
In summary, Palo Alto Networks faces heightened market and operational risks due to its reliance on a volatile tech sector and the increasing threat landscape in cybersecurity. Conversely, CDW Corporation enjoys a more stable market position with lower regulatory risks, though it still contends with moderate operational challenges.
Which one to choose?
When comparing CDW Corporation (CDW) and Palo Alto Networks, Inc. (PANW), several key metrics emerge. CDW exhibits strong profitability with a net profit margin of 5.13% and a solid return on equity (ROE) of 45.81%. Its price-to-earnings (P/E) ratio stands at 21.61, suggesting it may be undervalued compared to its growth potential. On the other hand, PANW shows higher revenue growth and an impressive gross profit margin of 73.41%, but it struggles with a high P/E ratio of 101.43, indicating potential overvaluation.
Analysts rate CDW with a B+ compared to PANW’s B, reflecting a more favorable outlook for CDW. Investors focused on growth may prefer PANW for its higher margins and revenue growth potential, while those prioritizing stability and reasonable valuation might favor CDW.
Specific risks for both companies include competition in their respective sectors and potential market volatility.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of CDW Corporation and Palo Alto Networks, Inc. to enhance your investment decisions:
