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Why Is CDW (CDW) Up 1.8% 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 1.8% in that time frame, underperforming 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 Q4 Earnings In line With Estimates
CDW reported fourth-quarter 2023 non-GAAP earnings per share (EPS) of $2.57, which matched the Zacks Consensus Estimate. Also, the bottom line rose 2.8% year over year.
The company’s revenues decreased 7.7% year over year to $5.018 billion. Net sales decreased 8.1% at constant currency. The downtick was caused due to weakness across all business segments. Also, quarterly revenues failed to beat the consensus mark of $5.359 billion.
Quarterly Details
Net sales of CDW’s Corporate segment amounted to $2.286 billion, declining 8% on a year-over-year basis.
The Small Business segment’s net sales of $370 million declined 12.7% year over year.
The Public segment’s net sales amounted to $1.776 billion, down 4.1% from the year-ago quarter. Revenues from Education customers declined 11.7%.
Revenues from Healthcare decreased 4.7%, while revenues from Government increased 4.5%.
Net sales in Other (Canadian and U.K. operations) declined 13.6% to $587 million.
CDW’s gross profit of $1.554 billion decreased 2.3% on a year-over-year basis. The gross margin expanded 130 basis points (bps) to 23% due to the favorable contribution of netted-down revenues, primarily software as a service.
The non-GAAP operating income decreased 0.8% year over year to $518.7 million. Additionally, the non-GAAP operating margin advanced 70 bps to 10.3%.
Selling and administrative expenses decreased 2.1% year over year to $719 million, primarily due to reduced discretionary expenses.
Balance Sheet and Cash Flow
As of Dec 31, 2023, CDW had $588.7 million of cash and cash equivalents compared with $440.7 million as of Sep 30, 2023.
The company has a long-term debt of $5.03 billion, lower than $5.66 billion as of Sep 30, 2023.
For the year ended Dec 31, 2023, CDW generated $1,598.7 million of cash flow from operating activities compared with $1,335 million in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.14% due to these changes.
VGM Scores
Currently, CDW has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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.
Performance of an Industry Player
CDW belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Fair Isaac (FICO - Free Report) , has gained 1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Fair Isaac reported revenues of $382.06 million in the last reported quarter, representing a year-over-year change of +10.8%. EPS of $4.81 for the same period compares with $4.26 a year ago.
For the current quarter, Fair Isaac is expected to post earnings of $5.80 per share, indicating a change of +21.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Fair Isaac. Also, the stock has a VGM Score of D.
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Why Is CDW (CDW) Up 1.8% Since Last Earnings Report?
A month has gone by since the last earnings report for CDW (CDW - Free Report) . Shares have added about 1.8% in that time frame, underperforming 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 Q4 Earnings In line With Estimates
CDW reported fourth-quarter 2023 non-GAAP earnings per share (EPS) of $2.57, which matched the Zacks Consensus Estimate. Also, the bottom line rose 2.8% year over year.
The company’s revenues decreased 7.7% year over year to $5.018 billion. Net sales decreased 8.1% at constant currency. The downtick was caused due to weakness across all business segments. Also, quarterly revenues failed to beat the consensus mark of $5.359 billion.
Quarterly Details
Net sales of CDW’s Corporate segment amounted to $2.286 billion, declining 8% on a year-over-year basis.
The Small Business segment’s net sales of $370 million declined 12.7% year over year.
The Public segment’s net sales amounted to $1.776 billion, down 4.1% from the year-ago quarter. Revenues from Education customers declined 11.7%.
Revenues from Healthcare decreased 4.7%, while revenues from Government increased 4.5%.
Net sales in Other (Canadian and U.K. operations) declined 13.6% to $587 million.
CDW’s gross profit of $1.554 billion decreased 2.3% on a year-over-year basis. The gross margin expanded 130 basis points (bps) to 23% due to the favorable contribution of netted-down revenues, primarily software as a service.
The non-GAAP operating income decreased 0.8% year over year to $518.7 million. Additionally, the non-GAAP operating margin advanced 70 bps to 10.3%.
Selling and administrative expenses decreased 2.1% year over year to $719 million, primarily due to reduced discretionary expenses.
Balance Sheet and Cash Flow
As of Dec 31, 2023, CDW had $588.7 million of cash and cash equivalents compared with $440.7 million as of Sep 30, 2023.
The company has a long-term debt of $5.03 billion, lower than $5.66 billion as of Sep 30, 2023.
For the year ended Dec 31, 2023, CDW generated $1,598.7 million of cash flow from operating activities compared with $1,335 million in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.14% due to these changes.
VGM Scores
Currently, CDW has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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.
Performance of an Industry Player
CDW belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Fair Isaac (FICO - Free Report) , has gained 1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Fair Isaac reported revenues of $382.06 million in the last reported quarter, representing a year-over-year change of +10.8%. EPS of $4.81 for the same period compares with $4.26 a year ago.
For the current quarter, Fair Isaac is expected to post earnings of $5.80 per share, indicating a change of +21.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Fair Isaac. Also, the stock has a VGM Score of D.