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CDW's Q2 Earnings Beat Estimates, Revenues Increase Y/Y

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CDW Corporation (CDW - Free Report) reported second-quarter 2022 non-GAAP earnings of  $2.49 per share, beating the Zacks Consensus Estimate of $2.40 and increasing 23% year over year.

The company’s revenues increased 19.4% year over year to $6.146 billion. On a constant-currency basis, net sales increased 20.5%. The performance was driven by strength across all segments and the contribution from the Sirius Computer acquisition. However, quarterly revenues missed the consensus mark of $6.155 billion. Unfavorable currency translations acted as a dampener.

Following the announcement, the shares are up 2.5% in the premarket trading on Aug 3.

CDW Corporation Price, Consensus and EPS Surprise

 

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 $2.661 billion, rising 34.2% on a year-over-year basis.

The Small Business segment’s net sales of $500 million rose 3.5% year over year.

In the Public segment, net sales amounted to $2.243 billion. The figure rose 7.8% from the year-earlier quarter’s levels. Revenues from Healthcare and Government customers were up 30.1% and 18.7%, respectively. Revenues from Education customers dropped 6.4%.

Net sales in Other (Canadian and U.K. operations) increased 23.8% to $742 million.

CDW’s gross profit of $1.168 million rallied 32.3% on a year-over-year basis. The gross margin expanded 180 basis points (bps) to 19%, mainly on a favorable product mix and rate.

The non-GAAP operating income increased 23.5% year over year to $516.3 million. Additionally, the non-GAAP operating margin advanced 30 bps to 8.4%.

Selling and administrative expenses rose 42.9% year over year to $732.9 million, primarily due to higher sales payroll expenses, increased coworker count and higher acquisition and integration costs.

Balance Sheet and Cash Flow

As of Jun 30, 2022, CDW had $541.6 million of cash and cash equivalents compared with $386.9 million as of Mar 31, 2022.

The company has a long-term debt of $6.481 billion, lower than $6.515 billion as of Mar 31, 2022.

For six months ended Jun 30, 2022, CDW generated $761.1 million of cash flow from operating activities compared with $344.9 billion in the comparable period in the prior fiscal.

Separately, the company announced that its board of directors authorized a quarterly cash dividend of 50 cents per share to be payable on Sep 9 to shareholders of record as of Aug 25.

Zacks Rank & Stocks to Consider

CDW currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector worth consideration are Cadence Design Systems (CDNS - Free Report) , Intuit (INTU - Free Report) and Badger Meter (BMI - Free Report) . Cadence and Badger Meter sports a Zacks Rank #1 (Strong Buy), while Intuit carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days. Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, with the average being 12.6%. Shares of BMI have lost 4.6% of their value in the past year.

The Zacks Consensus Estimate for Cadence’s 2022 earnings is pegged at $4.11 per share, up 5.7% 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 the last four quarters, the average being 9.8%. Shares of CDNS have increased 21.4% in the past year.

The Zacks Consensus Estimate for Intuit’s fiscal 2022 earnings is pegged at $11.72 per share, rising 0.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 15.6%.

Intuit’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 16.8%. Shares of INTU have lost 16.6% in the past year.