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CDW Corporation (CDW - Free Report) reported third-quarter 2022 non-GAAP earnings of $2.60 per share, beating the Zacks Consensus Estimate of $2.52 and increasing 22% year over year.
The company’s revenues increased 17.3% year over year to $6.216 billion. Net sales increased 18.7% at cc. Strength across all segments and the acquisition of Sirius Computer drove the performance. Unfavorable currency translations acted as a dampener. Quarterly revenues marginally beat the consensus mark of $6.213 billion.
Following the announcement, the shares are down 4.9% in the pre-market trading on Nov 2.
Net sales of CDW’s Corporate segment amounted to $2.578 billion, rising 24.7% on a year-over-year basis.
The Small Business segment’s net sales of $491 million rose 5.2% year over year.
The Public segment’s net sales amounted to $2.424 billion, rising 12.6% from the year-earlier quarter’s levels. Revenues from Healthcare and Government customers were up 38.6% and 27.7%, respectively. Revenues from Education customers dropped 7.5%.
Net sales in Other (Canadian and U.K. operations) increased 18.1% to $722 million.
CDW’s gross profit of $1.233 million increased 34.8% on a year-over-year basis. The gross margin expanded 250 basis points (bps) to 19.8%, mainly due to a favorable product mix and rate.
The non-GAAP operating income increased 26.2% year over year to $549 million. Additionally, the non-GAAP operating margin advanced 60 bps to 8.8%.
Selling and administrative expenses rose 45.1% year over year to $767 million, primarily due to higher sales payroll expenses, increased coworker count and higher acquisition and integration costs.
Balance Sheet and Cash Flow
As of Sep 30, CDW had $384.6 million of cash and cash equivalents compared with $541.6 million as of Jun 30.
The company has a long-term debt of $6.1 billion, lower than $6.481 billion as of Jun 30.
For nine months ended on Sep 30, CDW generated $1.094 billion of cash flow from operating activities compared with $636.7 million in the comparable period in the prior fiscal.
Separately, the company announced that its board of directors hiked quarterly cash dividend by 18% to 59 cents per share. The dividend will be payable on Dec 9 to shareholders of record as of Nov 25.
The Zacks Consensus Estimate for Pure Storage’s 2022 earnings is pegged at $1.18 per share, up 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have lost 25.5% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2022 earnings is pegged at $2.55 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 3%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 8.5%. Shares of BLKB have lost 25.5% in the past year.
The Zacks Consensus Estimate for Cadence’s 2022 earnings is pegged at $4.20 per share, up 2.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.7%.
CDNS’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average being 10.4%. Shares of CDNS have lost 12.8% in the past year.
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CDW's Q3 Earnings Beat Estimates, Revenues Increase Y/Y
CDW Corporation (CDW - Free Report) reported third-quarter 2022 non-GAAP earnings of $2.60 per share, beating the Zacks Consensus Estimate of $2.52 and increasing 22% year over year.
The company’s revenues increased 17.3% year over year to $6.216 billion. Net sales increased 18.7% at cc. Strength across all segments and the acquisition of Sirius Computer drove the performance. Unfavorable currency translations acted as a dampener. Quarterly revenues marginally beat the consensus mark of $6.213 billion.
Following the announcement, the shares are down 4.9% in the pre-market trading on Nov 2.
CDW Corporation Price, Consensus and EPS Surprise
CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote
Quarterly Details
Net sales of CDW’s Corporate segment amounted to $2.578 billion, rising 24.7% on a year-over-year basis.
The Small Business segment’s net sales of $491 million rose 5.2% year over year.
The Public segment’s net sales amounted to $2.424 billion, rising 12.6% from the year-earlier quarter’s levels. Revenues from Healthcare and Government customers were up 38.6% and 27.7%, respectively. Revenues from Education customers dropped 7.5%.
Net sales in Other (Canadian and U.K. operations) increased 18.1% to $722 million.
CDW’s gross profit of $1.233 million increased 34.8% on a year-over-year basis. The gross margin expanded 250 basis points (bps) to 19.8%, mainly due to a favorable product mix and rate.
The non-GAAP operating income increased 26.2% year over year to $549 million. Additionally, the non-GAAP operating margin advanced 60 bps to 8.8%.
Selling and administrative expenses rose 45.1% year over year to $767 million, primarily due to higher sales payroll expenses, increased coworker count and higher acquisition and integration costs.
Balance Sheet and Cash Flow
As of Sep 30, CDW had $384.6 million of cash and cash equivalents compared with $541.6 million as of Jun 30.
The company has a long-term debt of $6.1 billion, lower than $6.481 billion as of Jun 30.
For nine months ended on Sep 30, CDW generated $1.094 billion of cash flow from operating activities compared with $636.7 million in the comparable period in the prior fiscal.
Separately, the company announced that its board of directors hiked quarterly cash dividend by 18% to 59 cents per share. The dividend will be payable on Dec 9 to shareholders of record as of Nov 25.
Zacks Rank & Stocks to Consider
CDW currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology space are Pure Storage (PSTG - Free Report) , Blackbaud (BLKB - Free Report) and Cadence Design Systems (CDNS - Free Report) . All stocks presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Pure Storage’s 2022 earnings is pegged at $1.18 per share, up 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have lost 25.5% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2022 earnings is pegged at $2.55 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 3%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 8.5%. Shares of BLKB have lost 25.5% in the past year.
The Zacks Consensus Estimate for Cadence’s 2022 earnings is pegged at $4.20 per share, up 2.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.7%.
CDNS’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average being 10.4%. Shares of CDNS have lost 12.8% in the past year.