CDW's Q2 Earnings Surpass Estimates, Revenues Decrease Y/Y
CDW Corporation CDW reported second-quarter 2023 non-GAAP earnings per share (EPS) of $2.56, beating the Zacks Consensus Estimate of $2.34. However, the bottom line rose 3.2% year over year.
The company’s revenues decreased 8.5% year over year to $5.626 billion. Net sales decreased 8.2% at constant currency. The downtick was caused due to weakness across Corporate and Small Business segments. However, quarterly revenues beat the consensus mark of $5.404 billion.
Separately, the company announced a quarterly dividend, which will be paid on Sep 12, 2023, to shareholders of record as of Aug 25.
CDW Corporation Price, Consensus and EPS Surprise
CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote
Quarterly Details
Net sales of CDW’s Corporate segment amounted to $2.245 billion, declining 15.6% on a year-over-year basis.
The Small Business segment’s net sales of $396 million declined 20.8% year over year.
The Public segment’s net sales amounted to $2.295 billion, up 2.3% from the year-earlier quarter. Revenues from Education customers dropped 1.4%. Revenues from Healthcare were down 0.9%, while revenues from Government customers were up 11.8%.
Net sales in Other (Canadian and U.K. operations) declined 7% to $690 million.
CDW’s gross profit of $1.182 billion increased 1.1% on a year-over-year basis. The gross margin expanded 200 basis points (bps) to 21% due to a favorable product mix and rate.
The non-GAAP operating income increased 2.6% year over year to $530 million. Additionally, the non-GAAP operating margin advanced 100 bps to 9.4%.
Selling and administrative expenses rose 5% year over year to $769 million, primarily due to higher sales payroll expenses, increased coworker count and other expenses due to transformation initiatives.
Balance Sheet and Cash Flow
As of Jun 30, 2023, CDW had $203.9 million of cash and cash equivalents compared with $279.4 million as of Mar 31, 2023.
The company has a long-term debt of $5.72 billion, lower than $5.75 billion as of Mar 31, 2023.
For the six months that ended Jun 30, 2023, CDW generated $593.6 million of cash flow from operating activities compared with $761.1 million at the comparable period in the prior fiscal.
Zacks Rank & Stocks to Consider
CDW currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology space are InterDigital IDCC, Badger Meter BMI and Woodward WWD. InterDigital and Badger Meter presently sport a Zacks Rank #1 (Strong Buy), while Woodward currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.
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