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CDW Corp (CDW) Q4 Earnings & Revenues Top Estimates, Up Y/Y
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CDW Corporation (CDW - Free Report) reported better-than-anticipated results for fourth-quarter 2020. The company’s fourth-quarter non-GAAP earnings per share of $1.82 comfortably surpassed the Zacks Consensus Estimate of $1.53.
Moreover, the reported figure increased 16.1% year over year, mainly on higher revenues, improved product margin, better product mix, lower interest expenses and reduction in effective tax rate.
The company’s quarterly revenues of $4.96 billion outpaced the consensus mark of $4.54 billion. The top-line figure also increased 9.2% year over year on a reported basis and 11% on constant currency.
Higher sales to education and government customers more than offset the weakness in corporate, small businesses, and healthcare demand due to the pandemic-induced economic and business disruptions.
Net sales of CDW’s Corporate segment, amounting to $1.72 billion, witnessed an 11.2% decline on a year-over-year basis.
The Small Business segment’s net sales of $367 million dropped 4.8% year over year.
Coming to the Public segment, net sales of $2.30 billion jumped 46.5% from the year-earlier quarter. Moreover, revenues from Government and Education customers were up 29.9% and 142.3%, respectively. However, sales to Healthcare customers slid 13.8%.
Net sales in Other (Canadian and UK operations) edged down 0.4% to $576 million.
CDW’s gross profit of $881 million climbed 13.3% on a year-over-year basis. Gross margin expanded 70 basis points (bps) to 17.8% on solid product margin and lower cost of goods sold.
Non-GAAP operating income grew 9.9% year on year to $376 million. Additionally, non-GAAP operating margin advanced 10 bps to 7.6%, chiefly on higher gross margin, partially offset by inflated operating expenses.
Net interest expenses declined 2.9% year on year to $37 million.
Non-GAAP effective tax rate for the December-end quarter was 19.2%, lower than the year-ago quarter’s 21.4%.
Balance Sheet and Cash Flow
CDW exited 2020 with cash and cash equivalents of $1.41 billion compared with the $154 million witnessed at the end of 2019.
The company has a long-term debt of $3.86 billion compared with the prior year’s $3.28 billion.
CDW generated $1.31 billion of cash flow from operational activities in 2020.
Separately, CDW announced that its board of directors has authorized an increase of $1.25 billion to the company’s share-repurchase program and approved a quarterly cash dividend of 40 cents per share.
The $1.25-billion authorization is incremental to the company’s $338 million unused amount to the share-repurchase program as of Dec 31, 2020.
Furthermore, the company noted that the dividend rate has increased more than nine-fold since its IPO in June 2013. Since then, the company has returned more than $3.4 billion to shareholders through dividend payments.
The long-term earnings growth rate for Shopify, Zoom and Apple is currently pegged at 32.5%, 25% and 11.5%, respectively.
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Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
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CDW Corp (CDW) Q4 Earnings & Revenues Top Estimates, Up Y/Y
CDW Corporation (CDW - Free Report) reported better-than-anticipated results for fourth-quarter 2020. The company’s fourth-quarter non-GAAP earnings per share of $1.82 comfortably surpassed the Zacks Consensus Estimate of $1.53.
Moreover, the reported figure increased 16.1% year over year, mainly on higher revenues, improved product margin, better product mix, lower interest expenses and reduction in effective tax rate.
The company’s quarterly revenues of $4.96 billion outpaced the consensus mark of $4.54 billion. The top-line figure also increased 9.2% year over year on a reported basis and 11% on constant currency.
Higher sales to education and government customers more than offset the weakness in corporate, small businesses, and healthcare demand due to the pandemic-induced economic and business disruptions.
CDW Corporation Price, Consensus and EPS Surprise
CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote
Quarter in Detail
Net sales of CDW’s Corporate segment, amounting to $1.72 billion, witnessed an 11.2% decline on a year-over-year basis.
The Small Business segment’s net sales of $367 million dropped 4.8% year over year.
Coming to the Public segment, net sales of $2.30 billion jumped 46.5% from the year-earlier quarter. Moreover, revenues from Government and Education customers were up 29.9% and 142.3%, respectively. However, sales to Healthcare customers slid 13.8%.
Net sales in Other (Canadian and UK operations) edged down 0.4% to $576 million.
CDW’s gross profit of $881 million climbed 13.3% on a year-over-year basis. Gross margin expanded 70 basis points (bps) to 17.8% on solid product margin and lower cost of goods sold.
Non-GAAP operating income grew 9.9% year on year to $376 million. Additionally, non-GAAP operating margin advanced 10 bps to 7.6%, chiefly on higher gross margin, partially offset by inflated operating expenses.
Net interest expenses declined 2.9% year on year to $37 million.
Non-GAAP effective tax rate for the December-end quarter was 19.2%, lower than the year-ago quarter’s 21.4%.
Balance Sheet and Cash Flow
CDW exited 2020 with cash and cash equivalents of $1.41 billion compared with the $154 million witnessed at the end of 2019.
The company has a long-term debt of $3.86 billion compared with the prior year’s $3.28 billion.
CDW generated $1.31 billion of cash flow from operational activities in 2020.
Separately, CDW announced that its board of directors has authorized an increase of $1.25 billion to the company’s share-repurchase program and approved a quarterly cash dividend of 40 cents per share.
The $1.25-billion authorization is incremental to the company’s $338 million unused amount to the share-repurchase program as of Dec 31, 2020.
Furthermore, the company noted that the dividend rate has increased more than nine-fold since its IPO in June 2013. Since then, the company has returned more than $3.4 billion to shareholders through dividend payments.
Zacks Rank and Other Key Picks
CDW currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the broader technology sector include Shopify (SHOP - Free Report) , Zoom Video Communications (ZM - Free Report) and Apple (AAPL - Free Report) , all flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Shopify, Zoom and Apple is currently pegged at 32.5%, 25% and 11.5%, respectively.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>