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CDW (CDW) Up 4.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for CDW (CDW - Free Report) . Shares have added about 4.5% 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 the most recent earnings report in order to get a better handle on the important catalysts.
CDW's Q2 Earnings Miss Estimates
CDW Corporation reported second-quarter 2024 non-GAAP earnings per share (EPS) of $2.50, which missed the Zacks Consensus Estimate of $2.51. Also, the bottom line fell 2.6% year over year.
Quarterly revenues declined 3.6% year over year to $5.423 billion. The decrease is attributed to ongoing economic volatility and the complex technology landscape affecting customer spending, worsened by soft results across the Corporate, Small Business and Public segments. However, the top line beat the consensus mark of $5.4 billion.
Separately, the company announced a quarterly dividend of 62 cents, which will be paid on Sep 10, 2024, to shareholders on record as of Aug 26.
Quarterly Details
Net sales of CDW’s Corporate segment amounted to $2.195 billion, declining 2.2% on a year-over-year basis.
The Small Business segment’s net sales of $383 million fell 3.4% year over year.
The Public segment’s revenues totaled $2.243 billion, representing a 2.3% drop from the year-ago quarter. This was due to a 6.2% decrease in net sales to Government customers, a 0.9% decline in Education customers and a 0.1% fall in Healthcare customers.
Net sales in Other (Canadian and U.K. operations) plunged 12.7% to $602 million.
Despite the downfall in revenues, gross profit was $1.183 billion compared with $1.182 billion reported in the year-ago quarter. The gross margin expanded 80 basis points (bps) to 21.8%, driven by the robust contribution of netted-down revenues, mainly software as a service.
The non-GAAP operating income decreased 3.7% year over year to $510 million. Additionally, the non-GAAP operating margin remained stable at 9.4%.
Selling and administrative expenses fell 2.5% year over year to $769 million. This reduction was due to the absence of workplace optimization costs seen in the second quarter of 2023, partially offset by increased transformation costs.
Balance Sheet and Cash Flow
As of Jun 30, 2024, CDW had $665.3 million of cash and cash equivalents compared with $203.9 million as of Jun 30, 2023.
The company has a long-term debt of $4.42 billion, lower than $5.72 billion as of Jun 30, 2023.
For the six months that ended Jun 30, 2024, CDW generated $590 million of cash flow from operating activities compared with $593.6 million a year ago.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, CDW has an average Growth Score of C, though it is lagging a bit 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 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.
Performance of an Industry Player
CDW belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Infosys (INFY - Free Report) , has gained 4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Infosys reported revenues of $4.71 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $0.18 for the same period compares with $0.17 a year ago.
Infosys is expected to post earnings of $0.19 per share for the current quarter, representing a year-over-year change of +5.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Infosys has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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CDW (CDW) Up 4.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for CDW (CDW - Free Report) . Shares have added about 4.5% 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 the most recent earnings report in order to get a better handle on the important catalysts.
CDW's Q2 Earnings Miss Estimates
CDW Corporation reported second-quarter 2024 non-GAAP earnings per share (EPS) of $2.50, which missed the Zacks Consensus Estimate of $2.51. Also, the bottom line fell 2.6% year over year.
Quarterly revenues declined 3.6% year over year to $5.423 billion. The decrease is attributed to ongoing economic volatility and the complex technology landscape affecting customer spending, worsened by soft results across the Corporate, Small Business and Public segments. However, the top line beat the consensus mark of $5.4 billion.
Separately, the company announced a quarterly dividend of 62 cents, which will be paid on Sep 10, 2024, to shareholders on record as of Aug 26.
Quarterly Details
Net sales of CDW’s Corporate segment amounted to $2.195 billion, declining 2.2% on a year-over-year basis.
The Small Business segment’s net sales of $383 million fell 3.4% year over year.
The Public segment’s revenues totaled $2.243 billion, representing a 2.3% drop from the year-ago quarter. This was due to a 6.2% decrease in net sales to Government customers, a 0.9% decline in Education customers and a 0.1% fall in Healthcare customers.
Net sales in Other (Canadian and U.K. operations) plunged 12.7% to $602 million.
Despite the downfall in revenues, gross profit was $1.183 billion compared with $1.182 billion reported in the year-ago quarter. The gross margin expanded 80 basis points (bps) to 21.8%, driven by the robust contribution of netted-down revenues, mainly software as a service.
The non-GAAP operating income decreased 3.7% year over year to $510 million. Additionally, the non-GAAP operating margin remained stable at 9.4%.
Selling and administrative expenses fell 2.5% year over year to $769 million. This reduction was due to the absence of workplace optimization costs seen in the second quarter of 2023, partially offset by increased transformation costs.
Balance Sheet and Cash Flow
As of Jun 30, 2024, CDW had $665.3 million of cash and cash equivalents compared with $203.9 million as of Jun 30, 2023.
The company has a long-term debt of $4.42 billion, lower than $5.72 billion as of Jun 30, 2023.
For the six months that ended Jun 30, 2024, CDW generated $590 million of cash flow from operating activities compared with $593.6 million a year ago.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, CDW has an average Growth Score of C, though it is lagging a bit 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 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.
Performance of an Industry Player
CDW belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Infosys (INFY - Free Report) , has gained 4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Infosys reported revenues of $4.71 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $0.18 for the same period compares with $0.17 a year ago.
Infosys is expected to post earnings of $0.19 per share for the current quarter, representing a year-over-year change of +5.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Infosys has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.