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CDW Corp (CDW) Q1 Earnings & Revenues Top Estimates, Up Y/Y
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CDW Corporation (CDW - Free Report) reported solid results for first-quarter 2020, wherein both top and bottom lines surpassed the Zacks Consensus Estimate and marked significant year-over-year improvements.
The company’s first-quarter non-GAAP earnings per share increased 11% year over year to $1.38, mainly on higher revenues, partially offset by inflated selling and administrative (S&A) expenses and effective tax rate. Quarterly earnings also surpassed the Zacks Consensus Estimate by a couple of cents.
The company’s quarterly revenues grew 10.9% year over year to $4.39 billion and came in line with the Zacks Consensus Estimate. Moreover, revenues were up 9.4% at constant currency (cc). The company’s balanced portfolio of customer end markets and its broad product and solutions pipeline were key drivers.
Moreover, in its Apr 16 business update, CDW had stated that the company witnessed robust demand during the first quarter as the coronavirus-led global lockdown sparked urgent need for greater technology capabilities in corporate offices as well as households.
Quarter in Detail
Net sales of CDW’s Corporate segment amounting to $1.91 billion registered 8.4% growth on a year-over-year basis.
The Small Business segment’s net sales of $391 million increased 8.4% year over year.
Coming to the Public segment, net sales of $1.53 billion climbed 12.8% from the year-earlier quarter. Moreover, revenues from Government and Healthcare customers were up 14.7% and 7.1%, respectively. Sales to Education customers jumped 17.1%.
Net sales in Other (Canadian and UK operations) were up 3.2% to $561 million.
CDW’s gross profit of $757 million increased 12.6% on a year-over-year basis. Also, gross margin expanded 20 basis points (bps) to 17.2% driven by product margin.
Non-GAAP operating income increased 5.8% year over year to $304 million. However, non-GAAP operating margin contracted 40 bps to 6.9% mainly due to elevated S&A expenses, which flared up 15.2% year over year to $511 million. As a percentage of revenues, S&A expenses expanded 40 bps to 11.6%.
Effective tax rate for the first quarter was 20.7%, marginally higher than the year-ago quarter level of 20.2%.
Balance Sheet and Cash Flow
CDW exited the reported quarter with cash and cash equivalents of $214 million compared with the $154 million witnessed at the end of the sequential quarter.
The company has a long-term debt of $3.47 billion compared with the prior quarter’s $3.32 billion.
CDW generated $223 million of cash flow from operational activities in the January-March quarter.
The long-term earnings growth rate for Inphi, Workday and NVIDIA is currently pegged at 37.6%, 27.2%, and 15.2%, respectively.
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CDW Corp (CDW) Q1 Earnings & Revenues Top Estimates, Up Y/Y
CDW Corporation (CDW - Free Report) reported solid results for first-quarter 2020, wherein both top and bottom lines surpassed the Zacks Consensus Estimate and marked significant year-over-year improvements.
The company’s first-quarter non-GAAP earnings per share increased 11% year over year to $1.38, mainly on higher revenues, partially offset by inflated selling and administrative (S&A) expenses and effective tax rate. Quarterly earnings also surpassed the Zacks Consensus Estimate by a couple of cents.
The company’s quarterly revenues grew 10.9% year over year to $4.39 billion and came in line with the Zacks Consensus Estimate. Moreover, revenues were up 9.4% at constant currency (cc). The company’s balanced portfolio of customer end markets and its broad product and solutions pipeline were key drivers.
CDW Corporation Price, Consensus and EPS Surprise
CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote
Moreover, in its Apr 16 business update, CDW had stated that the company witnessed robust demand during the first quarter as the coronavirus-led global lockdown sparked urgent need for greater technology capabilities in corporate offices as well as households.
Quarter in Detail
Net sales of CDW’s Corporate segment amounting to $1.91 billion registered 8.4% growth on a year-over-year basis.
The Small Business segment’s net sales of $391 million increased 8.4% year over year.
Coming to the Public segment, net sales of $1.53 billion climbed 12.8% from the year-earlier quarter. Moreover, revenues from Government and Healthcare customers were up 14.7% and 7.1%, respectively. Sales to Education customers jumped 17.1%.
Net sales in Other (Canadian and UK operations) were up 3.2% to $561 million.
CDW’s gross profit of $757 million increased 12.6% on a year-over-year basis. Also, gross margin expanded 20 basis points (bps) to 17.2% driven by product margin.
Non-GAAP operating income increased 5.8% year over year to $304 million. However, non-GAAP operating margin contracted 40 bps to 6.9% mainly due to elevated S&A expenses, which flared up 15.2% year over year to $511 million. As a percentage of revenues, S&A expenses expanded 40 bps to 11.6%.
Effective tax rate for the first quarter was 20.7%, marginally higher than the year-ago quarter level of 20.2%.
Balance Sheet and Cash Flow
CDW exited the reported quarter with cash and cash equivalents of $214 million compared with the $154 million witnessed at the end of the sequential quarter.
The company has a long-term debt of $3.47 billion compared with the prior quarter’s $3.32 billion.
CDW generated $223 million of cash flow from operational activities in the January-March quarter.
Zacks Rank and Key Picks
Currently, CDW carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader technology sector include Inphi Corporation , Workday, Inc. (WDAY - Free Report) and NVIDIA Corporation (NVDA - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Inphi, Workday and NVIDIA is currently pegged at 37.6%, 27.2%, and 15.2%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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