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Why Is CDW (CDW) Down 3.5% 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 lost about 3.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CDW due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CDW reported fourth-quarter 2022 non-GAAP earnings of $2.50 per share, beating the Zacks Consensus Estimate of $2.45 and increasing 20.6% year over year.
The company’s revenues decreased 1.8% year over year to $5.438.3 billion. Net sales decreased 0.4% at constant currency. The downtick was caused due to weakness in Small Business and Public segment. Also, unfavorable currency translations acted as a dampener. Quarterly revenues failed to beat the consensus mark of $6.151 billion.
In 2022, total revenues came in at $23.75 billion compared with $20.82 billion in 2021, representing a rise of 14.1% year over year. Also, for 2022, the company reported non-GAAP earnings of $9.79 compared with $7.97 in 2021.
Quarterly Details
Net sales of CDW’s Corporate segment amounted to $2.484 billion, rising 6.9% on a year-over-year basis.
The Small Business segment’s net sales of $424 million declined 13.1% year over year.
The Public segment’s net sales amounted to $1.851 billion, down 8.7% from the year-earlier quarter’s levels. Revenues from Education customers dropped 30.9%. Revenues from Healthcare and Government customers were up 8.1% and 13.5%, respectively.
Net sales in Other (Canadian and U.K. operations) declined 2.7% to $680 million.
CDW’s gross profit of $1.181 million increased 21.1% on a year-over-year basis. The gross margin expanded 410 basis points (bps) to 21.7%, mainly due to a favorable product mix and rate.
The non-GAAP operating income increased 23.2% year over year to $523.1 million. Additionally, the non-GAAP operating margin advanced 190 bps to 9.6%.
Selling and administrative expenses rose 15.4% year over year to $735 million, primarily due to higher sales payroll expenses, increased coworker count and higher intangible asset amortization.
Balance Sheet and Cash Flow
As of Dec 31, 2022, CDW had $315.2 million of cash and cash equivalents compared with $384.6 million as of Sep 30.
The company has a long-term debt of $5.87 billion, lower than $6.1 billion as of Sep 30, 2022.
For the year that ended on Dec 31, 2022, CDW generated $1.335.9 billion of cash flow from operating activities compared with $784.6 million in the comparable period in the prior fiscal.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, CDW has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. 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 indicates a downward shift. Notably, CDW has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is CDW (CDW) Down 3.5% Since Last Earnings Report?
A month has gone by since the last earnings report for CDW (CDW - Free Report) . Shares have lost about 3.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CDW due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CDW's Q4 Earnings Beat Estimates, Revenues Decrease Y/Y
CDW reported fourth-quarter 2022 non-GAAP earnings of $2.50 per share, beating the Zacks Consensus Estimate of $2.45 and increasing 20.6% year over year.
The company’s revenues decreased 1.8% year over year to $5.438.3 billion. Net sales decreased 0.4% at constant currency. The downtick was caused due to weakness in Small Business and Public segment. Also, unfavorable currency translations acted as a dampener. Quarterly revenues failed to beat the consensus mark of $6.151 billion.
In 2022, total revenues came in at $23.75 billion compared with $20.82 billion in 2021, representing a rise of 14.1% year over year. Also, for 2022, the company reported non-GAAP earnings of $9.79 compared with $7.97 in 2021.
Quarterly Details
Net sales of CDW’s Corporate segment amounted to $2.484 billion, rising 6.9% on a year-over-year basis.
The Small Business segment’s net sales of $424 million declined 13.1% year over year.
The Public segment’s net sales amounted to $1.851 billion, down 8.7% from the year-earlier quarter’s levels. Revenues from Education customers dropped 30.9%. Revenues from Healthcare and Government customers were up 8.1% and 13.5%, respectively.
Net sales in Other (Canadian and U.K. operations) declined 2.7% to $680 million.
CDW’s gross profit of $1.181 million increased 21.1% on a year-over-year basis. The gross margin expanded 410 basis points (bps) to 21.7%, mainly due to a favorable product mix and rate.
The non-GAAP operating income increased 23.2% year over year to $523.1 million. Additionally, the non-GAAP operating margin advanced 190 bps to 9.6%.
Selling and administrative expenses rose 15.4% year over year to $735 million, primarily due to higher sales payroll expenses, increased coworker count and higher intangible asset amortization.
Balance Sheet and Cash Flow
As of Dec 31, 2022, CDW had $315.2 million of cash and cash equivalents compared with $384.6 million as of Sep 30.
The company has a long-term debt of $5.87 billion, lower than $6.1 billion as of Sep 30, 2022.
For the year that ended on Dec 31, 2022, CDW generated $1.335.9 billion of cash flow from operating activities compared with $784.6 million in the comparable period in the prior fiscal.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, CDW has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. 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 indicates a downward shift. Notably, CDW has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.