CDW's Quarterly Earnings Preview: What You Need to Know

Vernon Hills, Illinois-based CDW Corporation (CDW) provides information technology (IT) solutions in the United States, the United Kingdom, and Canada. With a market cap of $29.3 billion, it operates through Corporate, Small Business, and Public segments. The company is expected to announce its Q3 earnings before the market opens on Wednesday, Oct. 30.

Ahead of the event, analysts expect CDW to report a profit of $2.68 per share, up 3.1% from $2.60 per share reported in the year-ago quarter. The company has surpassed Wall Street's bottom-line estimates in two of the last four quarters while missing on two other occasions. Its adjusted EPS for the last reported quarter declined 3.7% year-over-year to $2.34, missing the consensus estimates by 2.1%.

For fiscal 2024, analysts expect CDW to report an adjusted EPS of $9.40, down 1.5% from $9.54 in fiscal 2023. However, in fiscal 2025, its EPS is expected to grow 9% year-over-year to $10.25.

CDW stock is down 4.3% on a YTD basis, substantially underperforming the S&P 500 Index’s ($SPX) 21.5% gains and the Technology Select Sector SPDR Fund’s (XLK) 18.7% returns during the same time frame.

CDW’s stock prices plunged 6.2% after the release of its disappointing Q2 earnings on Jul. 31. The company's revenues declined across all segments, leading to an overall net sales drop of 3.6% year-over-year, reaching $5.4 billion. This was primarily due to ongoing economic uncertainty and a challenging technology landscape, which caused customers to be cautious and measured approach to technology spending.

However, due to efficient cost management, including reductions in the cost of sales and selling and administrative expenses, the company achieved a 53-basis-point expansion in its net margin to 5.2% compared to the year-ago quarter, resulting in a 7% growth in net income, totaling $281.1 million.

The consensus opinion on CDW stock is moderately bullish, with an overall “Moderate Buy” rating. Out of the 11 analysts covering the stock, six recommend “Strong Buy,” one advises “Moderate Buy,” and four suggest “Hold” rating. The mean price target of $250.70 represents a potential upside of 15.2% from current price levels.

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On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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