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CDW Q3 Earnings and Revenues Surpass Estimates, Rise Y/Y

Zacks Equity Research

CDW Corporation’s CDW third-quarter 2019 non-GAAP earnings per share rose 19.8% year over year to $1.7 and also beat the Zacks Consensus Estimate of $1.58.

Further, revenues of $4.91 billion in the reported quarter marked a year-over-year rise of 12.2% and also topped the Zacks Consensus Estimate of $4.64 billion. Moreover, revenues were up 12.7% in constant currency (cc).

The company’s balanced portfolio of customer end-markets and its broad product and solutions pipeline are key drivers.

Quarter in Detail

Net sales of CDW’s Corporate segment amounting to $1.914 billion registered nearly 12.1% growth on a year-over-year basis.

Small Business segment’s net sales of $386 million increased 13.6% year over year.

Coming to Public segment, net sales of $2.101 billion climbed 12% from the year-earlier quarter. Moreover, revenues from Government and Healthcare customers were up 24.1% and 13.1%, respectively. Sales to Education customers inched up 1.8%.

Net sales in Other (Canadian and UK operations) ascended 12.3% to $507 million.

CDW’s gross profit of $713.6 million increased 14.4% on a year-over-year basis. Also, gross margin expanded 30 basis points (bps) to 16.6%. Higher mix of netted down revenues, such as warranties and Software-as-a-Service, was a positive as well.

Non-GAAP operating income increased 13.9% year over year to $380.4 million. Non-GAAP operating margin of 7.8 % improved 20 bps.

CDW Corporation Price, Consensus and EPS Surprise

CDW Corporation Price, Consensus and EPS Surprise
CDW Corporation Price, Consensus and EPS Surprise

CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote

Balance Sheet and Cash Flow

CDW exited the reported quarter with cash and cash equivalents of $166.9 million compared with $194.5 million at the end of the sequential quarter.

The company has a long-term debt of $3.26 billion compared with $3.25 billion in the sequential quarter.

It generated $682.3 million of cash flow from operational activities in the first nine months of 2019.


CDW anticipates 2019 revenues to grow 200-300 bps (earlier 400-475 bps) more than the U.S. IT market.

Zacks Rank and Other Stocks to Consider

CDW currently carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader technology sector are Benefitfocus BNFT, Five9, Inc. FIVN and Square SQ, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Benefitfocus, Five9 and Square is currently estimated at 20%, 10% and 25%, respectively.

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