CDK Global Inc. (NASDAQ: CDK): The Best-Of-Breed For Investing?


The Vanguard Group, Inc. recently announced the acquisition of new stake in CDK Global Inc. (NASDAQ:CDK). The institutional investor has increased its shareholding in the Technology company by 4.59% to 12.01 million shares with purchase of 0.53 million shares. This fresh investment now brings its stake to 9.88% valued currently at $472.11 million. In addition, Capital Research & Management Co. raised its holdings by 1.37 million to 5.78 million shares. And Clarkston Capital Partners LLC has lifted its position by 67.61% or 1.76 million shares – to 4.37 million shares.

With over 0.55 million CDK Global Inc. (CDK) shares trading Thursday and a closing price of $40.33 on the day, the dollar volume was approximately $22.16 million. The shares have shown a negative weekly performance of -1.90% and its price on 07/09/20 lost nearly -0.57%. Currently, there are 121.60M common shares owned by the public and among those 121.18M shares have been available to trade.

An analysis of what Wall Street brokers have to say about the expected price targets for this stock gives us this picture: 6 analysts who have offered their price forecasts for CDK have a consensus price objective of $50.75. The analysts have set the share’s price value over the next 12 months at a high of $55.00 and a low of $45.00 should the stock experience a downside. Incidentally, analysts’ outlook for the CDK Global Inc. stock is 1.80 for the next 12 months. The average price target is 20.3% above its last price level and an upside to the estimated low will see the stock gain 10.38% over that period. But an upside of 26.67% will see the stock hit the forecast high price target while mean target price for the stock is $51.50.

Insiders at the company have transacted a total of 56 times over the past 12 months, according to data filed with the U.S. Securities and Exchange Commission (SEC). 27 of these insider trades were purchases, accounting for 106,081 shares. Insider sales of the common stock occurred on 29 occasions, with total insider shares sold totaling 31,149 shares.

The top 3 mutual fund holders in CDK Global Inc. are Vanguard Total Stock Market Index, iShares Core S&P Mid Cap ETF, and Vanguard Small Cap Index Fund. Vanguard Total Stock Market Index owns 3.48 million shares of the company’s stock, all valued at over $136.96 million. The company sold 2520.0 shares recently to bring their total holdings to about 2.87% of the shares outstanding. iShares Core S&P Mid Cap ETF bought 6900.0 shares to see its total holdings expand to 3.31 million shares valued at over $130.2 million and representing 2.73% of the shares outstanding. Vanguard Small Cap Index Fund sold 23104.0 shares to bring its total holdings to over 3.15 million shares at a value of $123.67 million. Vanguard Small Cap Index Fund now owns shares totaling to 2.59% of the shares outstanding.

Shares of CDK Global Inc. (NASDAQ: CDK) opened at $40.52, down -$0.04 from a prior closing price of $40.56. However, the script later closed the day at $40.33, down -0.57%. The company’s stock has a 5-day price change of -1.90% and 13.96% over the past three months. CDK shares are trading -26.24% year to date (YTD), with the 12-month market performance down to -19.50% lower. It has a 12-month low price of $29.12 and touched a high of $57.00 over the same period. Currently, 0.55 million shares have been traded, compared to an average intraday trading volume of 871.09K shares. The stock is trading above its simple moving averages at the SMA20, SMA50, and SMA200, as the current price level is off by -2.10%, -0.11%, and -12.02% respectively.

Institutional ownership of CDK Global Inc. (NASDAQ: CDK) shares accounts for 86.70% of the company’s 121.60M shares outstanding. Mutual fund holders own 37.37%, while other institutional holders and individual stakeholders account for 48.00% and 0.66% respectively.

It has a market capitalization of $4.83B and a beta (3y monthly) value of 1.34. The stock’s trailing 12-month PE ratio is 25.99, while the earnings-per-share (ttm) stands at $1.55. The company has a PEG of 2.60 and a Quick Ratio of 1.60. Price movements for the stock have been influenced by the stock’s volatility, which stands at 2.94% over the week and 3.48% over the month.

Analysts forecast that CDK Global Inc. (CDK) will achieve an EPS of $0.5 for the current quarter, $0.66 for the next quarter and $3.07 for 2021. The lowest estimate earnings-per-share for the quarter is $0.34 while analysts give the company a high EPS estimate of $0.57. Comparatively, EPS for the current quarter was $0.88 a year ago. Earnings per share for the fiscal year are expected to decrease by -30.30%, and 4.81% over the next financial year. EPS should grow at an annualized rate of 10.00% over the next five years, compared to 5.40% over the past 5-year period.

If you are looking to buy this stock, then you may note that the average analyst recommendation by 6 brokerage firm advisors rate CDK Global Inc. (CDK) as a “Strong Buy” at a consensus score of 1.80. Specifically, 5 Wall Street analysts polled rate the stock as a buy, while 1 of the 6 advise that investors “hold,” and 0 rated it as a “Sell.”

Looking at the support for the CDK, a number of firms have released research notes about the stock. Morgan Stanley stated their Overweight rating for the stock in a research note on June 08, 2020, with the firm’s price target at $55. Wells Fargo coverage for the CDK Global Inc. (CDK) stock in a research note released on January 09, 2020 offered a Overweight rating with a price target of $65. Morgan Stanley was of a view on December 05, 2019 that the stock is Equal-Weight, while Wells Fargo gave the stock Market Perform rating on November 08, 2018. Barrington Research on their part issued Outperform rating on May 29, 2018.


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