Contrasting CDW (NASDAQ:CDW) and Fair Isaac (NYSE:FICO)

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

Institutional and Insider Ownership

85.8% of Fair Isaac shares are held by institutional investors. Comparatively, 93.2% of CDW shares are held by institutional investors. 3.5% of Fair Isaac shares are held by company insiders. Comparatively, 0.8% of CDW shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Fair Isaac and CDW, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fair Isaac	0	5	9	2	2.81
CDW	0	4	3	1	2.63

Fair Isaac presently has a consensus target price of $2,076.77, suggesting a potential upside of 26.28%. CDW has a consensus target price of $186.43, suggesting a potential upside of 40.00%. Given CDW’s higher possible upside, analysts plainly believe CDW is more favorable than Fair Isaac.

Valuation & Earnings

This table compares Fair Isaac and CDW”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fair Isaac	$1.99 billion	19.58	$651.95 million	$26.55	61.94
CDW	$21.00 billion	0.83	$1.08 billion	$7.92	16.81

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Fair Isaac	32.75%	-43.97%	32.68%
CDW	4.76%	51.89%	8.35%

Dividends

Fair Isaac pays an annual dividend of $0.08 per share and has a dividend yield of 0.0%. CDW pays an annual dividend of $2.52 per share and has a dividend yield of 1.9%. Fair Isaac pays out 0.3% of its earnings in the form of a dividend. CDW pays out 31.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. CDW has raised its dividend for 10 consecutive years. CDW is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Fair Isaac has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500. Comparatively, CDW has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Summary

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

About Fair Isaac

Fair Isaac Corporation develops analytic, software, and digital decisioning technologies and services that enable businesses to automate, enhance, and connect decisions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Scores and Software. The Software segment provides pre-configured analytic and decision management solution designed for various business needs or processes, such as account origination, customer management, customer engagement, fraud detection, financial crimes compliance, and marketing, as well as associated professional services. This segment also offers FICO Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by customers to address a wide range of business use cases. The Scores segment provides business-to-business scoring solutions and services for consumers that give clients access to predictive credit and other scores that can be integrated into their transaction streams and decision-making processes, as well as business-to-consumer scoring solutions comprising myFICO.com subscription offerings. It offers FICO Customer Analytics, FICO Responsible AI, FICO Advisors, FICO Business Outcome Simulator, FICO Forecaster, FICO TRIAD Customer Manager, FICO Blaze Advisor, FICO Xpress Optimization, FICO Falcon Fraud Manager, FICO Analytics Workbench, FICO Data Orchestrator, FICO DMP Streaming, FICO Decision Optimizer, and FICO Strategy Director, as well as software implementation and configuration services. The company markets its products and services primarily through its direct sales organization and indirect channels, as well as online. The company was formerly known as Fair Isaac & Company, Inc. and changed its name to Fair Isaac Corporation in July 1992. Fair Isaac Corporation was founded in 1956 and is headquartered in Bozeman, Montana.

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.