CDW Corporation Faces Challenges with Disappointing Q3 Earnings
CDW Corporation CDW reported weaker-than-expected Q3 results at the end of October, which has decreased earnings estimate revisions and rattled investor confidence.
With its stock down nearly -20% this year, CDW is now assigned a Zacks Rank #5 (Strong Sell), indicating potential for further declines.
Disappointing Earnings Performance
Investors were discouraged as CDW’s Q3 earnings of $2.63 per share fell short of the Zacks EPS Consensus of $2.84 by -7%. This marked a drop from $2.72 per share reported in Q3 2022. In fact, CDW has not met earnings expectations in three out of its last four quarterly reports, averaging a -4.73% surprise in that time frame.
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Sales for Q3 also fell, coming in at $5.51 billion compared to $5.62 billion in the same quarter last year, and were -3% below estimates of $5.71 billion. CDW has similarly missed revenue forecasts in three of the latest four quarters, accumulating an average sales surprise of -2.67%.
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Market Pressures and Increased Competition
CDW cites economic uncertainty and a rapidly changing technology landscape as reasons for its disappointing results, leading to slower customer decision-making and delayed projects.
Additionally, CDW faces intensified competition, drawing attention to rivals like Accenture ACN, Dell Technologies DELL, and IBM IBM.
Falling Earnings Forecasts
Recent fiscal forecasts indicate that earnings estimates for 2024 have decreased by 5% in the last month, now expected to be $9.46 per share, down from $9.97. More troubling, estimates for FY25 have also dipped over 2% recently.
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Conclusion
Given the competitive pressures and current financial performance, it might be prudent to hold off on investing in CDW’s stock for the time being. Other options appear more promising within the larger scope of the Zacks Computers-IT Services Industry, which ranks in the top 19% among 250 Zacks industries.
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