CDW (NASDAQ:CDW) Releases Earnings Results, Meets Expectations

Key Points

• CDW reported Q1 EPS of $2.28, matching estimates, while revenue of $5.68B beat consensus and rose 9.2% year‑over‑year, though gross and operating margins compressed modestly.
• Demand shifted toward AI and infrastructure (hardware +10%, networking/servers/storage each >20%), and CDW launched its Geared for Growth AI modernization program targeting a $100M–$200M annual run‑rate improvement by 2027–2028.
• Management returned $282M to shareholders and declared a $0.63 quarterly dividend while keeping net leverage near ~2.5x, but the stock plunged about 20% intraday on heavy volume following the results.

CDW (NASDAQ:CDW - Get Free Report) issued its quarterly earnings data on Wednesday. The information technology services provider reported $2.28 earnings per share (EPS) for the quarter, meeting analysts' consensus estimates of $2.28, FiscalAI reports. CDW had a net margin of 4.76% and a return on equity of 50.66%. The firm had revenue of $5.68 billion during the quarter, compared to the consensus estimate of $5.48 billion. During the same quarter in the previous year, the firm posted $2.15 EPS. The company's revenue for the quarter was up 9.2% compared to the same quarter last year.

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

• Q1 financials — Consolidated net sales rose 9%, gross profit grew 6%, non‑GAAP EPS increased 6%, and adjusted free cash flow was $251M, delivering a record first‑quarter gross profit.
• Demand shifted toward AI and infrastructure with hardware up 10% and networking/servers/storage each >20%, while services and netted‑down revenues were deprioritized, which pressured gross margin by roughly 60 basis points due to mix.
• The new Geared for Growth AI‑powered modernization program is being embedded across operations and sales (e.g., CDW Assist Super Agent), with expected benefits starting in H2 and a targeted $100M–$200M annual run‑rate improvement by 2027–2028.
• Supply and timing dynamics created an elevated backlog entering Q2 from pull‑ins and shipment delays, supporting a stronger near‑term outlook while management remains cautious about potential H2 uncertainty.
• Capital allocation remained shareholder‑friendly — $282M returned in Q1 ($201M buybacks, $81M dividends), net leverage at ~2.5x, a target ~25% dividend payout ratio, and opportunistic M&A/share repurchases going forward.

CDW Price Performance

CDW stock traded down $26.36 during mid-day trading on Wednesday, hitting $110.45. The stock had a trading volume of 4,502,986 shares, compared to its average volume of 1,698,129. The firm has a market capitalization of $14.13 billion, a P/E ratio of 13.60, a P/E/G ratio of 1.86 and a beta of 1.04. The company has a current ratio of 1.18, a quick ratio of 1.10 and a debt-to-equity ratio of 1.77. The firm's 50 day moving average is $125.61 and its 200 day moving average is $134.85. CDW has a one year low of $106.00 and a one year high of $192.30.

CDW News Summary

Here are the key news stories impacting CDW this week:

• Positive Sentiment: Revenue and demand: Net sales rose ~9.2% to $5.68B and CDW cited strong IT demand from AI and cloud spending — a clear growth signal for resellers. Reuters: CDW posts first-quarter revenue beat
• Positive Sentiment: Dividend increase: Board declared a $0.63 quarterly cash dividend, supporting shareholder yield and signaling confidence in cash flow. Business Wire: Dividend announcement
• Neutral Sentiment: Management/IR activity: CDW participated in the J.P. Morgan TMT conference (visibility with investors) and recently hired an HPE enterprise-services leader — strategic moves but not immediate earnings drivers. Yahoo Finance: JP Morgan conference
• Negative Sentiment: Margins and EPS nuance: While revenue beat, gross and operating margins compressed y/y (21.0% gross vs 21.6% a year ago; operating margin down) and some data providers flag a slight EPS miss vs certain estimates — investors often punish margin deterioration even with sales growth. Business Wire: Q1 results and margins
• Negative Sentiment: Heavy selling and volume: The decline accelerated on very high intraday volume and data feeds showing ~20% intraday price drop; Quiver notes insider sales and large institutional portfolio changes that may have amplified the sell-off. Quiver Quantitative: intraday move and flows

Wall Street Analyst Weigh In

A number of brokerages have recently issued reports on CDW. UBS Group cut their price objective on shares of CDW from $190.00 to $162.00 and set a "buy" rating for the company in a research report on Thursday, February 5th. Evercore reissued an "outperform" rating and set a $180.00 price objective on shares of CDW in a research report on Tuesday, January 20th. Morgan Stanley boosted their price objective on shares of CDW from $141.00 to $142.00 and gave the company an "equal weight" rating in a research report on Thursday, February 5th. Barclays cut their price objective on shares of CDW from $148.00 to $144.00 and set an "equal weight" rating for the company in a research report on Thursday, February 5th. Finally, Weiss Ratings reissued a "hold (c-)" rating on shares of CDW in a research report on Friday, April 24th. One equities research analyst has rated the stock with a Strong Buy rating, two have given a Buy rating and five have assigned a Hold rating to the stock. According to MarketBeat.com, the stock has a consensus rating of "Moderate Buy" and a consensus target price of $155.43.

Institutional Inflows and Outflows

Several hedge funds have recently bought and sold shares of the company. Empowered Funds LLC boosted its holdings in shares of CDW by 1.2% during the 1st quarter. Empowered Funds LLC now owns 18,076 shares of the information technology services provider's stock valued at $2,897,000 after purchasing an additional 216 shares during the last quarter. Brown Brothers Harriman & Co. boosted its holdings in shares of CDW by 38.6% during the 4th quarter. Brown Brothers Harriman & Co. now owns 912 shares of the information technology services provider's stock valued at $124,000 after purchasing an additional 254 shares during the last quarter. Public Employees Retirement System of Ohio boosted its holdings in shares of CDW by 0.6% during the 3rd quarter. Public Employees Retirement System of Ohio now owns 41,100 shares of the information technology services provider's stock valued at $6,546,000 after purchasing an additional 255 shares during the last quarter. Van ECK Associates Corp boosted its holdings in shares of CDW by 2.0% during the 3rd quarter. Van ECK Associates Corp now owns 25,412 shares of the information technology services provider's stock valued at $4,048,000 after purchasing an additional 510 shares during the last quarter. Finally, Harvest Fund Management Co. Ltd boosted its holdings in shares of CDW by 7.4% during the 3rd quarter. Harvest Fund Management Co. Ltd now owns 8,044 shares of the information technology services provider's stock valued at $1,281,000 after purchasing an additional 556 shares during the last quarter. Institutional investors own 93.15% of the company's stock.

About CDW

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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