CDW (NASDAQ:CDW) Posts Earnings Results, Beats Expectations By $0.11 EPS

CDW (NASDAQ:CDW) posted its quarterly earnings data on Wednesday. The information technology services provider reported $2.91 EPS for the quarter, topping analysts’ consensus estimates of $2.80 by $0.11, FiscalAI reports. CDW had a return on equity of 49.67% and a net margin of 4.70%.The firm had revenue of $6.57 billion during the quarter, compared to analysts’ expectations of $6.21 billion. During the same quarter last year, the business posted $2.60 EPS. The firm’s quarterly revenue was up 10.0% compared to the same quarter last year.

Here are the key takeaways from CDW’s conference call:

• CDW reported record second-quarter results: net sales rose 10% to $6.6 billion, gross profit increased 6%, and non-GAAP EPS climbed 12% to $2.91. Growth was led by infrastructure modernization, AI readiness, cloud, security, and strong international demand.
• Management raised its full-year outlook, now expecting mid-single-digit gross-profit growth and non-GAAP EPS growth at the high end of the high-single-digit range. The company cited robust written demand, shipping activity, backlog, and expected operating leverage from its Geared for Growth initiatives.
• AI is driving a broad, full-stack opportunity spanning hardware, cloud, security, data, implementation, and lifecycle services. Infrastructure demand is currently leading, while management expects services and recurring managed-services revenue to accelerate as customers move from procurement into deployment and ongoing management.
• Second-quarter gross margin declined 70 basis points to 20.1%, primarily because of mix toward larger enterprise infrastructure orders, which carry lower margins, and weaker services contribution due to deployment timing. Management expects second-half and full-year margins to remain below 2025 levels.
• Adjusted free-cash-flow conversion was only 42% of non-GAAP net income in the first half, below the 80%-90% target, as inventory increased by approximately $400 million to support customer demand and pricing volatility. Management expects working capital to normalize in the second half, but execution will be important.

CDW Trading Down 9.0%

Shares of CDW traded down $13.90 during mid-day trading on Wednesday, hitting $140.10. The company had a trading volume of 5,810,704 shares, compared to its average volume of 1,913,677. The business’s 50-day simple moving average is $134.75 and its 200-day simple moving average is $127.52. The company has a quick ratio of 1.06, a current ratio of 1.16 and a debt-to-equity ratio of 1.81. CDW has a 1-year low of $97.12 and a 1-year high of $171.55. The stock has a market cap of $17.90 billion, a PE ratio of 17.04, a P/E/G ratio of 1.96 and a beta of 0.96.

CDW Announces Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Thursday, September 10th. Stockholders of record on Tuesday, August 25th will be issued a dividend of $0.63 per share. This represents a $2.52 annualized dividend and a dividend yield of 1.8%. The ex-dividend date is Tuesday, August 25th. CDW’s dividend payout ratio is presently 30.66%.

Insider Transactions at CDW

In related news, Director David W. Nelms purchased 18,000 shares of the company’s stock in a transaction that occurred on Wednesday, May 27th. The stock was purchased at an average price of $111.43 per share, with a total value of $2,005,740.00. Following the completion of the transaction, the director owned 51,025 shares of the company’s stock, valued at approximately $5,685,715.75. This trade represents a 54.50% increase in their position. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which is available at this hyperlink. Insiders own 0.82% of the company’s stock.

Institutional Trading of CDW

Several institutional investors have recently made changes to their positions in the stock. Brown Brothers Harriman & Co. grew its stake in shares of CDW by 38.6% during the 4th quarter. Brown Brothers Harriman & Co. now owns 912 shares of the information technology services provider’s stock valued at $124,000 after buying an additional 254 shares during the period. Los Angeles Capital Management LLC purchased a new position in shares of CDW in the 4th quarter worth $144,000. Dark Forest Capital Management LP purchased a new position in shares of CDW in the 3rd quarter worth $313,000. Campbell & CO Investment Adviser LLC acquired a new position in CDW in the fourth quarter valued at $351,000. Finally, Syon Capital LLC boosted its holdings in CDW by 36.2% in the fourth quarter. Syon Capital LLC now owns 3,650 shares of the information technology services provider’s stock valued at $497,000 after acquiring an additional 970 shares during the last quarter. 93.15% of the stock is owned by hedge funds and other institutional investors.

Key Stories Impacting CDW

Here are the key news stories impacting CDW this week:

• Positive Sentiment: CDW reported second-quarter revenue of $6.57 billion, up 10% year over year and ahead of the $6.21 billion consensus estimate. Adjusted earnings of $2.91 per share also exceeded expectations of $2.80, helped by broad technology demand, AI infrastructure spending and international growth. CDW Q2 Earnings and Sales Beat
• Positive Sentiment: Management raised its 2026 outlook, calling for mid-single-digit gross-profit growth and adjusted EPS growth at the high end of the high-single-digit range. Government sales increased 13.6%, while international sales rose 22.9%, providing additional growth support.
• Positive Sentiment: The board declared a quarterly dividend of $0.630 per share, payable September 10 to shareholders of record on August 25. CDW Declares Quarterly Cash Dividend
• Neutral Sentiment: Chief Financial Officer Albert J. Miralles announced a planned retirement and leadership transition. The change introduces an execution and continuity consideration, although no immediate operational disruption was reported. CDW Announces CFO Retirement
• Negative Sentiment: Gross-profit margin declined to 20.1% from 20.8% and was below Wall Street expectations. Gross profit rose only 6.3%, while operating income increased 2.0%, indicating that larger, lower-margin infrastructure projects are diluting incremental profitability. Management also said gross profit could be roughly flat sequentially in the third quarter. CDW Shares Fall on Margin Miss
• Negative Sentiment: First-half adjusted free cash flow fell to $278.4 million from $458.9 million a year earlier as inventory and working-capital investment increased. The margin pressure and weaker cash conversion outweighed the earnings beat, driving the negative investor reaction. CDW Slides as Margin Pressure Outweighs Earnings Beat

Analyst Ratings Changes

A number of equities research analysts have recently commented on CDW shares. Royal Bank Of Canada upgraded shares of CDW to an “outperform” rating and set a $130.00 price target for the company in a report on Wednesday, May 27th. Citigroup upped their price objective on shares of CDW from $123.00 to $145.00 and gave the company a “neutral” rating in a research note on Monday, July 13th. JPMorgan Chase & Co. upgraded shares of CDW from a “neutral” rating to an “overweight” rating and set a $130.00 target price on the stock in a research report on Wednesday, May 27th. Barclays lowered their target price on shares of CDW from $144.00 to $123.00 and set an “equal weight” rating for the company in a research note on Thursday, May 7th. Finally, Morgan Stanley upgraded CDW from an “equal weight” rating to an “overweight” rating and boosted their price target for the company from $142.00 to $170.00 in a report on Tuesday, June 23rd. One research analyst has rated the stock with a Strong Buy rating, five have given a Buy rating and three have issued a Hold rating to the company’s stock. According to MarketBeat, CDW presently has a consensus rating of “Moderate Buy” and an average target price of $146.88.

About CDW

CDW (NASDAQ: CDW) is a leading provider of information technology products and integrated solutions for business, government, education and healthcare customers. The company sources and resells hardware and software from major technology vendors and packages those products with professional services, managed services and lifecycle support. Its offerings span IT infrastructure, cloud and data center solutions, cybersecurity, networking, unified communications, endpoint devices, and software licensing and procurement services designed to simplify IT operations for customers.

CDW combines a broad product portfolio with consultative sales, implementation and technical support capabilities.