CDW (NASDAQ:CDW) Posts Quarterly Earnings Results, Beats Expectations By $0.11 EPS

Key Points

• CDW beat quarterly expectations, reporting $2.91 in EPS versus the $2.80 consensus and $6.57 billion in revenue versus estimates of $6.21 billion. Revenue increased 10% year over year, supported by AI infrastructure, cloud, security and international demand.
• Management raised its full-year outlook and expects mid-single-digit gross-profit growth and adjusted EPS growth at the high end of the high-single-digit range. The company also declared a quarterly dividend of $0.63 per share.
• Despite the earnings beat, investors focused on weaker profitability and cash generation: gross margin fell to 20.1% due to lower-margin infrastructure mix, while first-half adjusted free-cash-flow conversion dropped to 42% as inventory and working-capital investment increased.

CDW (NASDAQ:CDW - Get Free Report) issued its quarterly earnings results on Wednesday. The information technology services provider reported $2.91 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $2.80 by $0.11, FiscalAI reports. The business had revenue of $6.57 billion for the quarter, compared to analyst estimates of $6.21 billion. CDW had a net margin of 4.70% and a return on equity of 49.67%. The business's revenue was up 10.0% compared to the same quarter last year. During the same period in the previous year, the business posted $2.60 earnings per share.

Here are the key takeaways from CDW's conference call:

• CDW reported record second-quarter results: net sales rose 10% to $6.6 billion, gross profit increased 6%, and non-GAAP EPS climbed 12% to $2.91. Growth was led by infrastructure modernization, AI readiness, cloud, security, and strong international demand.
• Management raised its full-year outlook, now expecting mid-single-digit gross-profit growth and non-GAAP EPS growth at the high end of the high-single-digit range. The company cited robust written demand, shipping activity, backlog, and expected operating leverage from its Geared for Growth initiatives.
• AI is driving a broad, full-stack opportunity spanning hardware, cloud, security, data, implementation, and lifecycle services. Infrastructure demand is currently leading, while management expects services and recurring managed-services revenue to accelerate as customers move from procurement into deployment and ongoing management.
• Second-quarter gross margin declined 70 basis points to 20.1%, primarily because of mix toward larger enterprise infrastructure orders, which carry lower margins, and weaker services contribution due to deployment timing. Management expects second-half and full-year margins to remain below 2025 levels.
• Adjusted free-cash-flow conversion was only 42% of non-GAAP net income in the first half, below the 80%-90% target, as inventory increased by approximately $400 million to support customer demand and pricing volatility. Management expects working capital to normalize in the second half, but execution will be important.

CDW Price Performance

CDW traded down $13.90 during trading on Wednesday, reaching $140.10. 5,810,704 shares of the stock were exchanged, compared to its average volume of 1,913,677. The company has a debt-to-equity ratio of 1.81, a current ratio of 1.16 and a quick ratio of 1.06. The company has a market capitalization of $17.90 billion, a price-to-earnings ratio of 17.04, a P/E/G ratio of 1.96 and a beta of 0.96. CDW has a 1 year low of $97.12 and a 1 year high of $171.55. The business's 50 day moving average price is $134.75 and its two-hundred day moving average price is $127.52.

CDW Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, September 10th. Investors of record on Tuesday, August 25th will be issued a dividend of $0.63 per share. The ex-dividend date of this dividend is Tuesday, August 25th. This represents a $2.52 annualized dividend and a yield of 1.8%. CDW's payout ratio is currently 30.66%.

More CDW News

Here are the key news stories impacting CDW this week:

• Positive Sentiment: CDW reported second-quarter revenue of $6.57 billion, up 10% year over year and ahead of the $6.21 billion consensus estimate. Adjusted earnings of $2.91 per share also exceeded expectations of $2.80, helped by broad technology demand, AI infrastructure spending and international growth. CDW Q2 Earnings and Sales Beat
• Positive Sentiment: Management raised its 2026 outlook, calling for mid-single-digit gross-profit growth and adjusted EPS growth at the high end of the high-single-digit range. Government sales increased 13.6%, while international sales rose 22.9%, providing additional growth support.
• Positive Sentiment: The board declared a quarterly dividend of $0.630 per share, payable September 10 to shareholders of record on August 25. CDW Declares Quarterly Cash Dividend
• Neutral Sentiment: Chief Financial Officer Albert J. Miralles announced a planned retirement and leadership transition. The change introduces an execution and continuity consideration, although no immediate operational disruption was reported. CDW Announces CFO Retirement
• Negative Sentiment: Gross-profit margin declined to 20.1% from 20.8% and was below Wall Street expectations. Gross profit rose only 6.3%, while operating income increased 2.0%, indicating that larger, lower-margin infrastructure projects are diluting incremental profitability. Management also said gross profit could be roughly flat sequentially in the third quarter. CDW Shares Fall on Margin Miss
• Negative Sentiment: First-half adjusted free cash flow fell to $278.4 million from $458.9 million a year earlier as inventory and working-capital investment increased. The margin pressure and weaker cash conversion outweighed the earnings beat, driving the negative investor reaction. CDW Slides as Margin Pressure Outweighs Earnings Beat

Insider Buying and Selling at CDW

In other news, Director David W. Nelms purchased 18,000 shares of the company's stock in a transaction dated Wednesday, May 27th. The stock was acquired at an average price of $111.43 per share, for a total transaction of $2,005,740.00. Following the completion of the transaction, the director directly owned 51,025 shares in the company, valued at $5,685,715.75. This represents a 54.50% increase in their position. The acquisition was disclosed in a filing with the SEC, which is available through this link. 0.82% of the stock is currently owned by corporate insiders.

Hedge Funds Weigh In On CDW

Hedge funds have recently added to or reduced their stakes in the business. Marshall Wace LLP lifted its holdings in shares of CDW by 255.7% in the third quarter. Marshall Wace LLP now owns 599,248 shares of the information technology services provider's stock valued at $95,448,000 after purchasing an additional 430,796 shares in the last quarter. Danske Bank A S purchased a new position in shares of CDW during the 3rd quarter worth approximately $13,347,000. BI Asset Management Fondsmaeglerselskab A S raised its position in shares of CDW by 1,339.7% during the 2nd quarter. BI Asset Management Fondsmaeglerselskab A S now owns 49,380 shares of the information technology services provider's stock worth $8,819,000 after purchasing an additional 45,950 shares during the last quarter. Foyston Gordon & Payne Inc raised its position in shares of CDW by 69.2% during the 4th quarter. Foyston Gordon & Payne Inc now owns 89,217 shares of the information technology services provider's stock worth $12,151,000 after purchasing an additional 36,485 shares during the last quarter. Finally, Russell Investments Group Ltd. lifted its stake in CDW by 18.2% in the 3rd quarter. Russell Investments Group Ltd. now owns 111,267 shares of the information technology services provider's stock valued at $17,782,000 after buying an additional 17,132 shares in the last quarter. 93.15% of the stock is currently owned by hedge funds and other institutional investors.

Analyst Ratings Changes

A number of equities analysts have recently issued reports on the company. JPMorgan Chase & Co. raised CDW from a "neutral" rating to an "overweight" rating and set a $130.00 target price for the company in a research note on Wednesday, May 27th. Morgan Stanley raised CDW from an "equal weight" rating to an "overweight" rating and upped their price objective for the stock from $142.00 to $170.00 in a report on Tuesday, June 23rd. Barclays lowered their price target on shares of CDW from $144.00 to $123.00 and set an "equal weight" rating on the stock in a research note on Thursday, May 7th. UBS Group cut their price target on shares of CDW from $162.00 to $147.00 and set a "buy" rating for the company in a report on Thursday, May 7th. Finally, Raymond James Financial set a $150.00 price objective on shares of CDW in a research note on Wednesday, May 6th. One analyst has rated the stock with a Strong Buy rating, five have issued a Buy rating and three have assigned a Hold rating to the company's stock. According to data from MarketBeat.com, the stock presently has a consensus rating of "Moderate Buy" and a consensus price target of $146.88.

CDW Company Profile

CDW NASDAQ: CDW is a leading provider of information technology products and integrated solutions for business, government, education and healthcare customers. The company sources and resells hardware and software from major technology vendors and packages those products with professional services, managed services and lifecycle support. Its offerings span IT infrastructure, cloud and data center solutions, cybersecurity, networking, unified communications, endpoint devices, and software licensing and procurement services designed to simplify IT operations for customers.

CDW combines a broad product portfolio with consultative sales, implementation and technical support capabilities.

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