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CDW Q4 Earnings and Revenues Surpass Estimates, Rise Y/Y

Zacks Equity Research

CDW Corporation’s CDW fourth-quarter 2019 non-GAAP earnings per share rose 18.4% year over year to $1.57 and also beat the Zacks Consensus Estimate of $1.47.

Further, revenues of $4.54 billion in the reported quarter marked a year-over-year rise of 11.3% and also topped the Zacks Consensus Estimate of $4.395 billion. Moreover, revenues were up 11.3% at 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 $1.965 billion registered nearly 7% growth on a year-over-year basis.

Small Business segment’s net sales of $391 million increased 7.9% year over year.

Coming to Public segment, net sales of $1.593 billion climbed 12.6% from the year-earlier quarter. Moreover, revenues from Government and Healthcare customers were up 20.7% and 13.6%, respectively. Sales to Education customers inched up 1.3%.

Net sales in Other (Canadian and UK operations) ascended 27.2% to $587 million.

CDW’s gross profit of $777.5 million increased 12.1% on a year-over-year basis. Also, gross margin expanded 10 basis points (bps) to 17.1% driven by product margin.

Non-GAAP operating income increased 14.3% year over year to $342.3 million. Non-GAAP operating margin of 7.5% improved 20 bps.

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 $154 million compared with $166.9 million at the end of the sequential quarter.

The company has a long-term debt of $3.32 billion compared with $3.26 billion in the sequential quarter.

CDW generated $1.03 billion of cash flow from operational activities in 2019.

2019 Highlights

Net sales in 2019 improved 11% year over year to $18.03 billion.

Corporate segment’s net sales of $7.499 billion (42% of total sales) increased 9.6%.

Small Business segment (8%) improved 11.1% to $1.510 billion.

Net sales of Public segment (38%) totaled $6.865 billion, up 11.5% from 2018.

Net sales in "Other" (12%) rose 14.6% to $2.158 billion.

Guidance

CDW anticipates 2020 revenues to grow 200-300 bps more than the U.S. IT market.

Zacks Rank and Stocks to Consider

CDW currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are Perficient PRFT, Applied Materials AMAT and ManTech International Corporation MANT, 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 Perficient, Applied Materials and ManTech is currently pegged at 11.75%, 8.2% and 8%, respectively.

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