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Should Investors Retain CDW Stock Post Q2 Earnings Release?
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CDW Corporation‘s (CDW - Free Report) performance is gaining from the global digital transformation and higher revenue growth in Corporate, Small Business and CDW Canada segments owing to the accelerated global digital transformation. The company recently reported robust second-quarter 2022 results.
The company reported non-GAAP earnings of $2.49 per share, which beat the Zacks Consensus Estimate of $2.40 and increased 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.
CDW’s 2022 and 2023 revenues are expected to increase 17.8% and 4.9%, respectively, year over year. Earnings are anticipated to rise 21.1% and 7.9% in 2022 and 2023, respectively.
CDW outpaced estimates in all of the trailing four quarters, delivering an earnings surprise of 6.8%, on average. The dividend yield is pegged at 1.06%.
Amid the ongoing volatility, CDW stock has been more resilient than the Zacks sub-industry. The stock has lost 6% in the past year compared with a 34.4% plunge of the industry.
CDW stock is down 11.3% from its 52-week high level of $208.71 on Jan 4, 2022, making it relatively affordable for investors.
Image Source: Zacks Investment Research
The company also has an impressive VGM Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Strong Fundamentals
Headquartered in Vernon Hills, IL, CDW is a leading provider of integrated IT solutions to small, medium and large business, government, education and healthcare customers in the United States, the U.K. and Canada. The company offers discrete hardware and software products to integrated IT solutions businesses such as mobility, security, data center optimization, cloud computing, virtualization and collaboration.
CDW is benefiting from the ongoing digital transformation and coronavirus-led work-from-home wave. In the past few quarters, the company is witnessing strong demand for products that enable remote working and operations continuity plans. It is registering strong revenue growth in product categories, including collaboration tools, enterprise storage, notebook, desktops, video, hardware and security software.
CDW's approach to encouraging organic growth and pursuing buyouts is likely to have raised the company's profile. Buyouts like Amplified IT and Focal Point Data Risk have helped it improve its educational and security capabilities, respectively.
CDW completed the acquisition of Sirius Computer Solutions in December 2021. The acquisition of Sirius is expected to have strengthened CDW's managed services capabilities.
CDW has been working to improve its capabilities in high-growth solution areas. It has also been increasing its service skills to attract customers.
However, weak macroeconomic conditions, global supply-chain troubles and component shortages continue to be major headwinds for this Zacks Rank #3 (Hold) stock. Also, high debt load, increasing expenses and volatile forex movements are added concerns.
In the last reported quarter, selling and administrative expenses rose 42.9% year over year to $732.9 million, primarily due to higher sales payroll expenses, increased co-worker count and higher acquisition and integration costs.
As of Jun 30, 2022, CDW had $541.6 million of cash and cash equivalents compared with long-term debt of $6.481 billion.
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, the average being 12.6%. Shares of BMI have lost 7.1% of their value in the past year.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.03 per share, up 9.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.
ANET earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 35.1% 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%.
Cadence’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.8%. Shares of CDNS have gained 16.6% in the past year.
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Should Investors Retain CDW Stock Post Q2 Earnings Release?
CDW Corporation‘s (CDW - Free Report) performance is gaining from the global digital transformation and higher revenue growth in Corporate, Small Business and CDW Canada segments owing to the accelerated global digital transformation. The company recently reported robust second-quarter 2022 results.
The company reported non-GAAP earnings of $2.49 per share, which beat the Zacks Consensus Estimate of $2.40 and increased 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.
CDW’s 2022 and 2023 revenues are expected to increase 17.8% and 4.9%, respectively, year over year. Earnings are anticipated to rise 21.1% and 7.9% in 2022 and 2023, respectively.
CDW outpaced estimates in all of the trailing four quarters, delivering an earnings surprise of 6.8%, on average. The dividend yield is pegged at 1.06%.
Amid the ongoing volatility, CDW stock has been more resilient than the Zacks sub-industry. The stock has lost 6% in the past year compared with a 34.4% plunge of the industry.
CDW stock is down 11.3% from its 52-week high level of $208.71 on Jan 4, 2022, making it relatively affordable for investors.
Image Source: Zacks Investment Research
The company also has an impressive VGM Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Strong Fundamentals
Headquartered in Vernon Hills, IL, CDW is a leading provider of integrated IT solutions to small, medium and large business, government, education and healthcare customers in the United States, the U.K. and Canada. The company offers discrete hardware and software products to integrated IT solutions businesses such as mobility, security, data center optimization, cloud computing, virtualization and collaboration.
CDW is benefiting from the ongoing digital transformation and coronavirus-led work-from-home wave. In the past few quarters, the company is witnessing strong demand for products that enable remote working and operations continuity plans. It is registering strong revenue growth in product categories, including collaboration tools, enterprise storage, notebook, desktops, video, hardware and security software.
CDW's approach to encouraging organic growth and pursuing buyouts is likely to have raised the company's profile. Buyouts like Amplified IT and Focal Point Data Risk have helped it improve its educational and security capabilities, respectively.
CDW completed the acquisition of Sirius Computer Solutions in December 2021. The acquisition of Sirius is expected to have strengthened CDW's managed services capabilities.
CDW has been working to improve its capabilities in high-growth solution areas. It has also been increasing its service skills to attract customers.
However, weak macroeconomic conditions, global supply-chain troubles and component shortages continue to be major headwinds for this Zacks Rank #3 (Hold) stock. Also, high debt load, increasing expenses and volatile forex movements are added concerns.
In the last reported quarter, selling and administrative expenses rose 42.9% year over year to $732.9 million, primarily due to higher sales payroll expenses, increased co-worker count and higher acquisition and integration costs.
As of Jun 30, 2022, CDW had $541.6 million of cash and cash equivalents compared with long-term debt of $6.481 billion.
Stocks to Consider
Some better-ranked stocks from the broader technology sector worth consideration are Arista Networks (ANET - Free Report) , Cadence Design Systems (CDNS - Free Report) and Badger Meter (BMI - Free Report) . Arista Networks sports a Zacks Rank #1 (Strong Buy), while Badger Meter and Cadence carry a Zacks Rank #2 (Buy). 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, the average being 12.6%. Shares of BMI have lost 7.1% of their value in the past year.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.03 per share, up 9.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.
ANET earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 35.1% 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%.
Cadence’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.8%. Shares of CDNS have gained 16.6% in the past year.