Core Viewpoint - The market anticipates CDW to report a year-over-year increase in earnings driven by higher revenues in its upcoming earnings report for the quarter ended March 2025, with a focus on how actual results compare to estimates [1][2]. Earnings Expectations - CDW is expected to post quarterly earnings of $1.96 per share, reflecting a year-over-year change of +2.1%, while revenues are projected to be $4.89 billion, up 0.4% from the previous year [3]. - The consensus EPS estimate has been revised 2.79% lower over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for CDW is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +1.02% [10][11]. - Despite the positive Earnings ESP, CDW currently holds a Zacks Rank of 4, complicating predictions of an earnings beat [11]. Historical Performance - In the last reported quarter, CDW was expected to earn $2.33 per share but exceeded expectations with earnings of $2.48, achieving a surprise of +6.44% [12]. - Over the past four quarters, CDW has only beaten consensus EPS estimates once [13]. Investment Considerations - An earnings beat or miss may not solely dictate stock movement, as other factors can influence investor sentiment [14]. - While betting on stocks expected to beat earnings increases the odds of success, CDW does not currently appear to be a compelling earnings-beat candidate [15][16].

Group 1: Company Performance - CDW shares increased by 9.2% to $159.48, following a 12.1% loss over the past four weeks, indicating a rebound in business momentum across all sales units and global markets [1] - The cloud and SaaS business saw strong growth, with software sales up 5%, driven by double-digit growth in SaaS and IaaS, and a significant impact on profits with gross profit rising in the mid-teens [2] - CDW Managed Services grew by over 20%, and the company aims to outpace the U.S. IT market by 2–3% in 2025, supported by a customer base of over 250,000 [2] Group 2: Financial Expectations - CDW is expected to report quarterly earnings of $1.96 per share, reflecting a year-over-year change of +2.1%, with revenues projected at $4.9 billion, up 0.7% from the previous year [3] - The consensus EPS estimate for CDW has remained unchanged over the last 30 days, suggesting that stock price movements may be influenced by trends in earnings estimate revisions [5] Group 3: Market Position and Comparisons - CDW's share buyback programs and robust cash flow are seen as positive factors for the company's prospects [3] - In comparison, Taboola.com Ltd. (TBLA) closed the last trading session 9.1% higher, but has returned -12.1% in the past month, indicating differing performance within the same industry [5]

Core Insights - CDW Engineering has partnered with Ecovert to launch Climate Enhanced Building Condition Assessments (CE-BCA), integrating decarbonization planning and climate resilience into traditional assessments [1][2] - The CE-BCA addresses the increasing pressure on the real estate industry regarding sustainability, regulatory compliance, and ESG considerations [2] - This service provides property owners and investors with critical insights into emissions profiles and carbon reduction opportunities, aligning with Canada's net-zero goals [3][6] Comprehensive Report Features - The CE-BCA delivers a single, comprehensive report that evaluates a property's climate risks, resiliency, and carbon footprint [6] - It includes recommendations for energy-efficient replacements and a single-source cost estimate to avoid contradictory information [7] - The assessment identifies incentive programs to offset capital costs related to sustainable upgrades, enhancing long-term property value [6][7] Company Background - CDW Engineering is a leading provider of commercial property inspection and engineering consulting services in Canada, with decades of experience [4] - Ecovert specializes in sustainable building solutions, focusing on reducing carbon footprints and improving energy efficiency through innovative strategies [5]

Core Viewpoint - CDW's recent earnings report shows a mixed performance with a slight decline in year-over-year earnings, while revenues have grown modestly, indicating a challenging demand environment across various segments [2][3][4]. Financial Performance - CDW reported Q4 2024 non-GAAP EPS of $2.48, exceeding the Zacks Consensus Estimate of $2.33, but reflecting a 3.5% year-over-year decline [2]. - Revenues for Q4 2024 increased by 3.3% year-over-year to $5.186 billion, surpassing the consensus estimate of $4.97 billion, driven by strong performance in Corporate, Small Business, Public, and International segments [3]. - For the full year 2024, net sales decreased by 1.8% year-over-year to $21 million due to cautious technology spending, although the healthcare vertical grew by 7.1% [4]. Segment Analysis - Corporate segment net sales were $2.345 billion, up 2.6% year-over-year [5]. - Small Business segment net sales rose 2.7% year-over-year to $380 million [5]. - Public segment revenues totaled $1.854 billion, a 4.4% increase, with healthcare customer sales surging by 27.5%, while government and education sectors saw declines [5][6]. Margin and Expenses - Gross profit was $1.155 billion, a slight increase of 0.1% year-over-year, but gross profit margin decreased from 23% to 22.3% due to a higher mix of notebook and desktop sales [7]. - Non-GAAP operating income fell 3.8% year-over-year to $499 million, with the operating margin declining to 9.6% from 10.3% [7]. - Selling and administrative expenses increased by 3.9% year-over-year to $747 million, driven by various cost factors [8]. Balance Sheet and Cash Flow - As of December 31, 2024, CDW had cash and cash equivalents of $503.5 million, down from $946.7 million as of September 30, 2024 [9]. - Long-term debt remained stable at $5.607 billion [9]. - Cash flow from operating activities for the year was $1.277 billion, compared to $1.6 million in the previous year [9]. Market Outlook - Estimates for CDW have trended downward over the past month, indicating a cautious outlook [10][12]. - The stock currently holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the near term [12]. Industry Comparison - CDW operates within the Zacks Computers - IT Services industry, where competitor Amdocs reported a revenue decline of 10.9% year-over-year, contrasting with CDW's modest growth [13]. - Amdocs is expected to post earnings of $1.71 per share for the current quarter, reflecting a 9.6% increase from the previous year [14].

Financial Performance - In 2024, CDW generated net sales of $20.99 billion, a decrease from $21.38 billion in 2023, and $23.75 billion in 2022[42]. - Net sales for the year ended December 31, 2024, decreased by $377 million, or 1.8%, to $20,998.7 million compared to $21,376.0 million in 2023[169]. - Gross profit for 2024 was $4,602.4 million, a decrease of $50 million, or 1.1%, with a gross profit margin of 21.9%, up from 21.8% in 2023[165]. - Operating income decreased by $30 million, or 1.8%, to $1,651.3 million for 2024, maintaining an operating income margin of 7.9%[167]. - Net income for 2024 was $1,077.8 million, down 2.4% from $1,104.3 million in 2023[163]. - Non-GAAP net income for 2024 was $1,287.2 million, compared to $1,346.2 million in 2023[160]. - Average daily sales decreased to $82.7 million in 2024 from $84.2 million in 2023[160]. - Free cash flow for 2024 was $1,154.7 million, down from $1,450.5 million in 2023, representing a decrease of approximately 20.3%[189]. - Adjusted free cash flow for 2024 was $1,079.0 million, compared to $1,426.8 million in 2023, reflecting a decline of about 24.4%[189]. - Net cash provided by operating activities was $1,277.3 million in 2024, down from $1,598.7 million in 2023[160]. - The effective income tax rate for 2024 was 24.9%, compared to 23.9% in 2023, primarily due to lower excess tax benefits on equity-based compensation[168]. Sales and Market Segments - The US business accounted for approximately 90% of net sales, with five dedicated customer channels each generating over $1.5 billion in net sales in 2024[27]. - Net sales from the UK and Canada combined reached $2.5 billion in 2024[27]. - Corporate segment net sales decreased by $124 million, or 1.4%, primarily due to a decrease in netcomm products[172]. - Public segment net sales decreased by $148 million, or 1.8%, mainly due to declines in various hardware categories[175]. Operational Insights - CDW serves over 250,000 customers across business, government, education, and healthcare sectors in the US, UK, and Canada[24]. - The company operates two distribution centers in North America and one in the UK, handling approximately 26 million units annually[32]. - Drop-shipment arrangements accounted for approximately 54% of total North America net sales in 2024[33]. - The company has partnerships with over 1,000 vendor partners, generating $2.0 billion in net sales from each of its three largest partners in 2024[29]. - The company is positioned to benefit from growing demand for IT solutions driven by new technologies, including hybrid and cloud computing and artificial intelligence[22]. Employee and Workplace - The company has approximately 15,100 coworkers globally, with 11,500 in the US and 3,600 in international locations[46]. - Over 50% of US net sales are generated by account managers with more than seven years of tenure[46]. - The company is committed to prioritizing the health and well-being of coworkers, dedicating resources to identify safety hazards and provide mental health resources[51]. - The company’s total rewards philosophy includes competitive compensation and benefits designed to attract and retain talent[50]. Risks and Challenges - Cybersecurity threats pose significant risks to the company's operations, with potential impacts on reputation and compliance with legal obligations[74]. - The company faces risks related to accounts receivable, particularly during economic downturns, which could adversely affect cash flows[89]. - Inventory risks are heightened due to rapid technological changes and potential obsolescence, necessitating effective inventory management strategies[90]. - The company is exposed to increased labor costs and turnover rates, which could disrupt operations and financial performance[84]. - The company maintains insurance for data security, but coverage may be insufficient to address all potential losses from security breaches[79]. - The company is subject to legal and regulatory risks, including compliance with public sector contracts, which could result in fines or termination of contracts[106]. Financial Position and Debt - The company had a total debt of $5.8 billion as of December 31, 2024, with an additional $355 million in obligations under inventory financing agreements[115]. - Total long-term debt increased to $5,606.8 million in 2024 from $5,031.4 million in 2023, marking an increase of about 11.4%[216]. - The company had $635 million of variable rate debt outstanding as of December 31, 2024, exposing it to interest rate risk[121]. - As of December 31, 2024, the company had $1.2 billion available for additional borrowing under its Revolving Loan Facility[120]. Shareholder Returns - On February 5, 2025, the Board of Directors declared a quarterly cash dividend of $0.625 per share, payable on March 11, 2025[140]. - The company repurchased a total of 0.8 million shares during the three months ended December 31, 2024, with an average price paid per share ranging from $177.39 to $216.91[142]. - The company authorized a $750 million increase to its share repurchase program, which was incremental to approximately $588 million remaining as of December 31, 2024[143]. - The company repurchased 2.4 million shares for $500 million under its share repurchase program in 2024[198]. Strategic Initiatives - The company is implementing a new enterprise resource planning (ERP) system, expected to be released in 2025, with incremental releases continuing in 2026[55]. - The company’s marketing strategy targets current and prospective customers through integrated programs across various channels, including digital and social media[53]. - The company’s ability to compete effectively depends on continued innovations in technology and the adoption of those innovations by customers[64].

Group 1 - The analyst initially gave a hold rating to CDW Corp. due to uncertainty regarding the timing of growth recovery [1] - After reviewing CDW's 4Q24 results, the analyst's views have changed, indicating a potential shift in outlook for the company [1] - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing the importance of buying quality companies at a discount [1]

Financial Data and Key Metrics Changes - For Q4 2024, net sales reached $5.2 billion, a 5% increase compared to 2023 on an average daily sales basis [10] - Gross profit was $1.16 billion, flat as reported but up 2% on an average daily sales basis [10] - Non-GAAP operating income was nearly $500 million, down 4% year-over-year, and non-GAAP net income per share was $2.48, down 4% [11][12] - Full year consolidated gross profit was approximately 1% below 2023, with a 3% decline in top line [13] Business Line Data and Key Metrics Changes - Corporate and Small Business segments both saw a 4% increase in top line [18] - Healthcare segment experienced a standout performance with a 30% increase [18] - Education declined by 2%, while government spending faced uncertainty leading to a decline [19] - Hardware sales increased by 4%, with client devices and storage showing mid-single-digit growth [20] Market Data and Key Metrics Changes - International sales grew by 5%, but were below historical growth rates due to lack of budget flush activity [44] - Commercial markets showed signs of stability, returning to growth despite cautious customer behavior [17] - Public sector performance varied, with Healthcare driving growth while Education and government faced challenges [19] Company Strategy and Development Direction - The company maintains a focus on delivering as-a-service solutions and enhancing customer service capabilities [11][12] - Strategic investments in cloud and SaaS offerings are expected to drive future growth [28] - The acquisition of Mission Cloud Services is aimed at expanding AWS capabilities and enhancing service offerings [29][30] Management's Comments on Operating Environment and Future Outlook - Management anticipates low single-digit growth in the U.S. IT market for 2025, with expectations to outpace market growth by 200 to 300 basis points [35] - Customer sentiment remains cautious, with ongoing project scrutiny and a focus on short-term ROI [36] - The company is positioned to leverage competitive advantages to outperform the market despite macroeconomic uncertainties [37] Other Important Information - The company returned $832 million to shareholders through dividends and share repurchases, with an increase in share repurchase authorization by $750 million [14][56] - Adjusted free cash flow for 2024 was $1.1 billion, achieving 84% of non-GAAP net income [55] Q&A Session Summary Question: How does the company view different parts of the public vertical for growth? - Management acknowledges the fluidity and lack of clarity in the public sector, particularly in Education and government, and is cautiously optimistic about technology's long-term role [70][72] Question: What is driving the muted gross profit dollar growth? - Management indicates that the variance in growth rates is not significant, with a slight shift in mix impacting gross profit [78] Question: What drove the strong performance in Healthcare? - The strong performance is attributed to a balanced success in cloud offerings and strategic investments in Healthcare capabilities [82][84] Question: How does the company view the impact of Microsoft changes on results? - Management sees the impact from Microsoft changes as not material and is pivoting to other growth opportunities [91] Question: What is the expectation for margins in fiscal '25? - Management expects core business margins to hold firm, with modest growth in solutions aiding margins [108] Question: What is the significance of the Mission Cloud Services acquisition? - The acquisition is seen as a strategic investment that will enhance growth rates and capabilities, although immediate financial impact will be limited [114][116]

Core Insights - CDW Corporation reported fourth-quarter 2024 non-GAAP EPS of $2.48, exceeding the Zacks Consensus Estimate of $2.33, but reflecting a 3.5% year-over-year decline [1] - The company's revenues increased by 3.3% year over year to $5.186 billion, surpassing the consensus estimate of $4.97 billion, driven by strong performance in Corporate, Small Business, Public, and International segments [2] Financial Performance - For 2024, net sales decreased by 1.8% year over year to $21 million due to cautious technology spending, although the healthcare vertical grew by 7.1% [3] - CDW announced a quarterly dividend of 62.5 cents, payable on March 11, 2025, and authorized a $750 million increase to its share repurchase program [3] Stock Market Reaction - Following the results, CDW's shares rose by 11.5% in pre-market trading on February 5, despite a 13.6% decline over the past year compared to the Zacks Computers-IT Services industry's growth of 9.6% [4] Segment Performance - Corporate segment net sales were $2.345 billion, up 2.6% year over year; Small Business segment net sales were $380 million, up 2.7%; Public segment revenues totaled $1.854 billion, reflecting 4.4% growth, driven by a 27.5% increase in healthcare customer sales [5] - Other operations in Canada and the U.K. saw net sales rise by 3.4% to $607 million [6] Margin Analysis - Gross profit was $1.155 billion, a slight increase of 0.1% year over year, with gross profit margin decreasing from 23% to 22.3% due to a higher mix of notebook and desktop sales [7] - Non-GAAP operating income fell by 3.8% year over year to $499 million, with the non-GAAP operating margin decreasing from 10.3% to 9.6% [7] Expense Overview - Selling and administrative expenses rose by 3.9% year over year to $747 million, primarily due to lower performance-based compensation, higher workplace optimization costs, and credit loss provisions [9] Balance Sheet and Cash Flow - As of December 31, 2024, CDW had $503.5 million in cash and cash equivalents, down from $946.7 million as of September 30, 2024; long-term debt remained stable at $5.607 billion [10] - The company generated $1.277 billion in cash flow from operating activities for the year, compared to $1.6 million in the previous year [10]

Investors looking for stocks in the Computers - IT Services sector might want to consider either CDW (CDW) or CyberArk (CYBR) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Score ...

For the quarter ended December 2024, CDW (CDW) reported revenue of $5.19 billion, up 3.3% over the same period last year. EPS came in at $2.48, compared to $2.57 in the year-ago quarter.The reported revenue represents a surprise of +4.34% over the Zacks Consensus Estimate of $4.97 billion. With the consensus EPS estimate being $2.33, the EPS surprise was +6.44%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations ...