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Why Is CDW (CDW) Up 10.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for CDW (CDW - Free Report) . Shares have added about 10.6% 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 drivers.
CDW 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
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 top 40% 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 broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, CDW has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
CDW belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, ServiceNow (NOW - Free Report) , has gained 10.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
ServiceNow reported revenues of $1.83 billion in the last reported quarter, representing a year-over-year change of +21.1%. EPS of $1.96 for the same period compares with $1.55 a year ago.
ServiceNow is expected to post earnings of $2 per share for the current quarter, representing a year-over-year change of +37%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.
ServiceNow has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is CDW (CDW) Up 10.6% Since Last Earnings Report?
A month has gone by since the last earnings report for CDW (CDW - Free Report) . Shares have added about 10.6% 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 drivers.
CDW's Q3 Earnings Beat Estimates, Revenues Increase Y/Y
CDW 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
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 top 40% 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 broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, CDW has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
CDW belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, ServiceNow (NOW - Free Report) , has gained 10.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
ServiceNow reported revenues of $1.83 billion in the last reported quarter, representing a year-over-year change of +21.1%. EPS of $1.96 for the same period compares with $1.55 a year ago.
ServiceNow is expected to post earnings of $2 per share for the current quarter, representing a year-over-year change of +37%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.
ServiceNow has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.