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CDW to Post Q3 Earnings: What's in the Cards for the Stock?

Zacks Equity Research

CDW Corporation CDW is slated to release third-quarter 2019 results on Oct 31.

The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $4.64 billion, indicating 6.03% growth from the year-ago reported figure. Further, the consensus mark for earnings of $1.58 suggests 11.27% rise from the year-ago reported quarter.

The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 8.87%.

In the second quarter, the company’s non-GAAP earnings rose 15.7% year over year to $1.6 and also beat the Zacks Consensus Estimate of $1.5.

Revenues in the reported quarter totaled $4.63 billion, marking a year-over-year increase of 10.6% and also topping the Zacks Consensus Estimate of $4.49 billion. Moreover, revenues were up 11.2% in constant currency (cc).

CDW Corporation Price and EPS Surprise

CDW Corporation Price and EPS Surprise

CDW Corporation price-eps-surprise | CDW Corporation Quote

Factors to Impact Q3 Results

CDW’s third-quarter results are likely to have been driven by the company’s balanced portfolio of customer end-markets and its strongly broad product and solutions pipeline. Strong device refresh cycle is a major driver for the company, a trend that most likely continued in the third quarter as well.

Solid growth in the international markets is likely to have been a key driver. Moreover, the acquisition of Scalar is expected to have been accretive in the third quarter. Notably, in the last reported quarter, growth in Canada was aided by organic as well as the Scalar buyout.

However, due to seasonality, management expects a low single-digit increase in sequential average daily sales from the second quarter to the third.

Adverse foreign currency fluctuations and macroeconomic perils are likely to have posed a key threat. Also, the highly competitive environment might get reflected in the upcoming earnings release.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for CDW this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CDW’s Zacks Rank #2 and an Earnings ESP of 0.00% make surprise prediction difficult.

Stocks to Consider

Here are some stocks worth considering as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Advanced Energy Industries, Inc. AEIS has an Earnings ESP of +4.17% and a Zacks Rank of 1. The company is slated to release quarterly results on Nov 12. You can see the complete list of today’s Zacks #1 Rank stocks here.

MeetMe, Inc. MEET has an Earnings ESP of +4.17% and a Zacks Rank of 2. The company is scheduled to report quarterly results on Nov 7.

DELL TECHNOLOGIES DELL has an Earnings ESP of +0.78% and is Zacks #2 Ranked. The company is scheduled to report quarterly results on Nov 26.

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