We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is CDW (CDW) Up 2% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for CDW (CDW - Free Report) . Shares have added about 2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CDW due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CDW Corp Q4 Earnings & Revenues Top Estimates, Up Y/Y
CDW 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 9.85% due to these changes.
VGM Scores
At this time, CDW has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise CDW has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is CDW (CDW) Up 2% Since Last Earnings Report?
It has been about a month since the last earnings report for CDW (CDW - Free Report) . Shares have added about 2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CDW due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CDW Corp Q4 Earnings & Revenues Top Estimates, Up Y/Y
CDW 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 9.85% due to these changes.
VGM Scores
At this time, CDW has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise CDW has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.