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CDW Ahead of Q3 Earnings: Key Factors Investors Should Watch
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Key Takeaways
CDW expects Q3 non-GAAP EPS growth at the upper end of the high-single-digit range year over year.
AI infrastructure demand, sustained IT spending and cost controls could aid growth, despite margin pressures.
CDW acquired Lovelytics to expand data and AI expertise, while $5.46 billion in net debt poses a risk.
CDW Corporation (CDW - Free Report) is set to report third-quarter 2026 results on Nov. 4, before the closing bell.
The Zacks Consensus Estimate for revenues is set at $6.12 billion, representing a 6.6% increase from the prior-year quarter.
The consensus estimate for earnings is pegged at $2.92 per share, unchanged in the past 60 days, indicating a 7.8% increase from the year-ago quarter’s reported figure. CDW expects third-quarter non-GAAP EPS growth to be at the upper end of the high-single-digit range year over year.
CDW’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 3.2%.
Image Source: Zacks Investment Research
Key Factors to Watch in CDW's Q3 Earnings
CDW third-quarter performance is expected to have been driven by sustained IT spending, growing demand for AI infrastructure and improved profitability, aided by a strong backlog and disciplined expense and capital allocation. In the second quarter, net sales increased 10% year over year to $6.57 billion, driven by demand for data storage, servers, notebooks and mobile devices, software and networking products. However, margin pressure from the hardware sales mix and higher operating expenses remain key considerations heading into the upcoming earnings.
Investors should watch whether stronger corporate IT investments and resilient government and healthcare spending support revenue growth, as cautious budgets and delayed purchases could limit momentum. CDW expects mid-single-digit year-over-year gross profit growth in the to-be-reported quarter, while lower SG&A expenses, supported by its Geared for Growth program, are expected to reduce operating expenses as a percentage of gross profit both year over year and sequentially.
CDW's diversified customer base provides exposure to multiple sources of technology spending. Continued growth across multiple customer categories would indicate that broad-based demand supports its performance rather than a limited number of strong markets. In the second quarter, commercial sales increased 9.2% year over year to $3.97 billion, while government sales climbed 13.6% to $848 million. Education sales edged up 0.7% to $933 million. Sales from CDW's U.K. and Canadian operations grew 22.9% to $826 million.
For the third quarter, we expect revenues from Total Commercial, Government and Education to be $3.8 billion, $696 million and $805 million, respectively. Revenues from the International part are estimated to be $667.7 million, down 4.4%.
CDW continues to pursue strategic acquisitions to expand cloud and managed services while maintaining disciplined capital allocation. In September, CDW completed the buyout of Lovelytics, a data and AI services firm and member of the Databricks Brickbuilder Partner Network. By adding Lovelytics’ specialized data, analytics and AI expertise to its extensive technology portfolio and customer base, CDW aims to position itself as a more comprehensive partner for enterprises moving from AI pilots to production.
It returned $706 million to shareholders in the first half of 2026, with more than $1.1 billion remaining in buyback capacity and net leverage at 2.5X. Although adjusted free cash flow fell short of its conversion target, management expects improvement in the second half, supported by greater efficiency from its Geared for Growth initiatives.
Nonetheless, CDW faces intense competition, rapid technology changes and uncertain customer spending, requiring continued investment in AI expertise, services and partner relationships to maintain growth and profitability. Despite 10% second-quarter sales growth, cautious spending, higher hardware prices, weak education demand and margin pressures could weigh on performance. Additionally, $5.46 billion in net debt and a longer cash conversion cycle highlight balance-sheet and working-capital risks that could constrain financial flexibility.
What Our Model Suggests for CDW
Our proven model does not predict an earnings beat for CDW this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not exactly the case here.
CDW currently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are three stocks you may want to consider, as our model shows that these have the right elements to post an earnings beat in this reporting cycle.
ALL is scheduled to report quarterly earnings on Nov. 4. The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $7.03, indicating a year-over-year decrease of 37.1%. ALL’s earnings beat estimates in each of the last four reported quarters.
Advanced Micro Devices, Inc. (AMD - Free Report) has an Earnings ESP of +3.49% and a Zacks Rank #3 at present. AMD is scheduled to report quarterly figures on Nov. 3. The Zacks Consensus Estimate for AMD’s to-be-reported quarter’s earnings and revenues is pegged at $1.94 per share and $13.12 billion, respectively. Shares of AMD have skyrocketed 94.4% in the past year.
AMETEK (AME - Free Report) has an Earnings ESP of +0.37% and a Zacks Rank #1. AMETEK is set to report third-quarter 2026 results on Nov. 3. The Zacks Consensus Estimate for AME’s to-be-reported quarter’s earnings and revenues is pegged at $2.12 per share and $2.16 billion, respectively. AMETEK’s shares have gained 17.4% year to date.
View the Zacks #1 Rank List
Image: Bigstock
CDW Ahead of Q3 Earnings: Key Factors Investors Should Watch
Key Takeaways
CDW Corporation (CDW - Free Report) is set to report third-quarter 2026 results on Nov. 4, before the closing bell.
The Zacks Consensus Estimate for revenues is set at $6.12 billion, representing a 6.6% increase from the prior-year quarter.
The consensus estimate for earnings is pegged at $2.92 per share, unchanged in the past 60 days, indicating a 7.8% increase from the year-ago quarter’s reported figure. CDW expects third-quarter non-GAAP EPS growth to be at the upper end of the high-single-digit range year over year.
CDW’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 3.2%.
Image Source: Zacks Investment Research
Key Factors to Watch in CDW's Q3 Earnings
CDW third-quarter performance is expected to have been driven by sustained IT spending, growing demand for AI infrastructure and improved profitability, aided by a strong backlog and disciplined expense and capital allocation. In the second quarter, net sales increased 10% year over year to $6.57 billion, driven by demand for data storage, servers, notebooks and mobile devices, software and networking products. However, margin pressure from the hardware sales mix and higher operating expenses remain key considerations heading into the upcoming earnings.
Investors should watch whether stronger corporate IT investments and resilient government and healthcare spending support revenue growth, as cautious budgets and delayed purchases could limit momentum. CDW expects mid-single-digit year-over-year gross profit growth in the to-be-reported quarter, while lower SG&A expenses, supported by its Geared for Growth program, are expected to reduce operating expenses as a percentage of gross profit both year over year and sequentially.
CDW's diversified customer base provides exposure to multiple sources of technology spending. Continued growth across multiple customer categories would indicate that broad-based demand supports its performance rather than a limited number of strong markets. In the second quarter, commercial sales increased 9.2% year over year to $3.97 billion, while government sales climbed 13.6% to $848 million. Education sales edged up 0.7% to $933 million. Sales from CDW's U.K. and Canadian operations grew 22.9% to $826 million.
For the third quarter, we expect revenues from Total Commercial, Government and Education to be $3.8 billion, $696 million and $805 million, respectively. Revenues from the International part are estimated to be $667.7 million, down 4.4%.
CDW Corporation Price and EPS Surprise
CDW Corporation price-eps-surprise | CDW Corporation Quote
CDW continues to pursue strategic acquisitions to expand cloud and managed services while maintaining disciplined capital allocation. In September, CDW completed the buyout of Lovelytics, a data and AI services firm and member of the Databricks Brickbuilder Partner Network. By adding Lovelytics’ specialized data, analytics and AI expertise to its extensive technology portfolio and customer base, CDW aims to position itself as a more comprehensive partner for enterprises moving from AI pilots to production.
It returned $706 million to shareholders in the first half of 2026, with more than $1.1 billion remaining in buyback capacity and net leverage at 2.5X. Although adjusted free cash flow fell short of its conversion target, management expects improvement in the second half, supported by greater efficiency from its Geared for Growth initiatives.
Nonetheless, CDW faces intense competition, rapid technology changes and uncertain customer spending, requiring continued investment in AI expertise, services and partner relationships to maintain growth and profitability. Despite 10% second-quarter sales growth, cautious spending, higher hardware prices, weak education demand and margin pressures could weigh on performance. Additionally, $5.46 billion in net debt and a longer cash conversion cycle highlight balance-sheet and working-capital risks that could constrain financial flexibility.
What Our Model Suggests for CDW
Our proven model does not predict an earnings beat for CDW this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not exactly the case here.
CDW currently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are three stocks you may want to consider, as our model shows that these have the right elements to post an earnings beat in this reporting cycle.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +5.25% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
ALL is scheduled to report quarterly earnings on Nov. 4. The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $7.03, indicating a year-over-year decrease of 37.1%. ALL’s earnings beat estimates in each of the last four reported quarters.
Advanced Micro Devices, Inc. (AMD - Free Report) has an Earnings ESP of +3.49% and a Zacks Rank #3 at present. AMD is scheduled to report quarterly figures on Nov. 3. The Zacks Consensus Estimate for AMD’s to-be-reported quarter’s earnings and revenues is pegged at $1.94 per share and $13.12 billion, respectively. Shares of AMD have skyrocketed 94.4% in the past year.
AMETEK (AME - Free Report) has an Earnings ESP of +0.37% and a Zacks Rank #1. AMETEK is set to report third-quarter 2026 results on Nov. 3. The Zacks Consensus Estimate for AME’s to-be-reported quarter’s earnings and revenues is pegged at $2.12 per share and $2.16 billion, respectively. AMETEK’s shares have gained 17.4% year to date.