CDW Corporation (NASDAQ:CDW) Released Earnings Last Week And Analysts Lifted Their Price Target To US$252
It's been a good week for CDW Corporation (NASDAQ:CDW) shareholders, because the company has just released its latest annual results, and the shares gained 5.4% to US$245. Results were roughly in line with estimates, with revenues of US$21b and statutory earnings per share of US$8.10. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for CDW
Taking into account the latest results, the most recent consensus for CDW from ten analysts is for revenues of US$22.0b in 2024. If met, it would imply a credible 3.1% increase on its revenue over the past 12 months. Per-share earnings are expected to swell 15% to US$9.46. Before this earnings report, the analysts had been forecasting revenues of US$22.6b and earnings per share (EPS) of US$9.05 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
The average price target increased 7.7% to US$252, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic CDW analyst has a price target of US$274 per share, while the most pessimistic values it at US$226. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting CDW is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that CDW's revenue growth is expected to slow, with the forecast 3.1% annualised growth rate until the end of 2024 being well below the historical 7.2% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.4% per year. Factoring in the forecast slowdown in growth, it seems obvious that CDW is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around CDW's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on CDW. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for CDW going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for CDW you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
