Core Viewpoint - UBS has set a price target of $190 for CDW Corporation, indicating a potential price increase of approximately 33.61% from its current price of $142.21, following the company's Q3 2025 earnings call [2][5] Company Overview - CDW Corporation is a leading provider of technology solutions for various sectors including business, government, education, and healthcare, offering a wide range of products and services such as hardware, software, and integrated IT solutions [1] - The company competes with other technology service providers like Insight Enterprises and SHI International [1] Financial Performance - CDW's stock price is currently at $141.59, showing a slight decrease of 0.07, or approximately -0.05% [3] - The stock has fluctuated between a low of $141.11 and a high of $144.46 on the current trading day [3] - Over the past year, CDW's stock has experienced significant volatility, with a high of $222.92 and a low of $137.31 [3][5] Market Position - The company has a market capitalization of approximately $18.56 billion, indicating its substantial presence in the technology solutions industry [4] - Today's trading volume for CDW is 1,108,491 shares, reflecting active investor interest [4]

Financial Performance - Net sales for the three months ended September 30, 2025, increased by $221 million, or 4.0%, to $5,737.4 million compared to $5,516.6 million in the same period of 2024[110] - Gross profit for the three months ended September 30, 2025, increased by $55 million, or 4.6%, to $1,255.5 million, with a gross profit margin of 21.9%[111] - Operating income for the three months ended September 30, 2025, decreased by $38 million, or 8.0%, to $443.3 million, resulting in an operating income margin of 7.7%[112] - Net income for the three months ended September 30, 2025, decreased by $25.4 million, or 8.0%, to $291.0 million, with a net income per diluted share of $2.21[109] - For the nine months ended September 30, 2025, net sales increased by $1,100 million, or 7.0%, to $16,913.1 million compared to $15,812.7 million in the same period of 2024[114] - Gross profit for the nine months ended September 30, 2025, increased by $172 million, or 5.0%, to $3,619.0 million, with a gross profit margin of 21.4%[115] Expenses and Cash Flow - Selling and administrative expenses for the nine months ended September 30, 2025, increased by $190 million, or 8.6%, to $2,394.1 million[116] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $771.4 million, down from $932.0 million in the same period of 2024[106] - Adjusted free cash flow for the nine months ended September 30, 2025, was $668.0 million, compared to $764.1 million in the same period of 2024[106] - Free cash flow for the nine months ended September 30, 2025, was $692.2 million, down from $838.0 million in 2024[156] - Net cash provided by operating activities decreased by $160.6 million to $771.4 million for the nine months ended September 30, 2025, compared to $932.0 million in 2024[164][166] Debt and Financing - Net debt as of September 30, 2025, was $5,175.9 million, an increase from $4,872.3 million as of September 30, 2024[106] - Total unsecured indebtedness as of September 30, 2025, was $5.6 billion, with compliance to covenants under credit agreements[159] - The company repaid $211 million of the 4.125% Senior Notes due 2025 during the second quarter of 2025[159] - The company has entered into inventory financing agreements to enhance working capital without incurring interest expenses[161] - The company repurchased 2.9 million shares of common stock for $500 million during the nine months ended September 30, 2025[162] Segment Performance - Corporate segment net sales increased by $94.2 million, or 4.4%, primarily due to higher sales of netcomm products, software, and desktops[126] - Small Business segment net sales rose by $54.1 million, or 14.2%, driven by increased sales of notebooks/mobile devices, software, and desktops[128] - Public segment net sales increased by $14 million, or 0.6%, mainly due to growth in government and healthcare services, offset by a decline in education hardware sales[131] - Corporate segment gross profit increased by $11.2 million, or 2.2%, despite a decrease in gross profit margin to 23.1%[127] - Small Business segment gross profit rose by $10.9 million, or 12.4%, with a gross profit margin decrease to 22.8%[129] - Public segment gross profit increased by $13.3 million, or 2.8%, with a gross profit margin of 20.9%[132] Other Financial Metrics - Non-GAAP operating income for the three months ended September 30, 2025, was $530.6 million, representing a margin of 9.2%, compared to $534.0 million and 9.7% in 2024[149] - Non-GAAP net income for the nine months ended September 30, 2025, was $987.4 million, with a net income per diluted share of $7.45, compared to $954.5 million and $7.04 in 2024[151] - The cash conversion cycle improved to 11 days as of September 30, 2025, from 17 days in 2024[169] Future Outlook - The company anticipates potential impacts from inflationary pressures, interest rates, and competition on future performance[182] Dividend and Shareholder Returns - The quarterly cash dividend declared on November 4, 2025, is $0.630 per share, payable on December 10, 2025[162]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Core Insights - CDW Corporation reported third-quarter 2025 non-GAAP earnings per share (EPS) of $2.71, exceeding the Zacks Consensus Estimate of $2.53, with a year-over-year increase of 3% [1][8] - Revenues rose 4% year over year to $5.74 billion, with constant currency sales growth of 3.8%, driven by demand across various product categories despite a slowdown in data storage and servers [2][8] Financial Performance - The Corporate segment net sales were $2.25 billion, up 4.4% year over year, while the Small Business segment saw a 14.2% increase to $434 million [4] - The Public segment's revenues reached $2.35 billion, a 0.6% increase, supported by growth in Government and Healthcare customers, although the Education sector declined by 8.5% [4] - Gross profit increased by 4.6% year over year to $1.26 billion, with a slight rise in gross profit margin to 21.9% [6] - Non-GAAP operating income fell 0.6% year over year to $530.6 million, with the operating margin decreasing to 9.2% [6] Future Outlook - CDW reaffirmed its goal to exceed U.S. IT market growth by 200–300 basis points at constant currency [3][8] - A quarterly dividend of 63 cents was announced, reflecting a 1% year-over-year increase, to be paid on December 10, 2025 [3] Balance Sheet and Cash Flow - As of September 30, 2025, CDW had cash and cash equivalents of $452.9 million, down from $946.7 million a year ago, with long-term debt increasing to $5.62 billion [9] - Cash flow from operating activities for the nine months ending September 30, 2025, was $771.4 million, compared to $932 million in the previous year [9]

Financial Data and Key Metrics Changes - Third quarter consolidated net sales were $5.7 billion, up 4% year-over-year [6] - Gross profit was $1.3 billion, up 5% [6] - Non-GAAP operating income was $531 million, down 1% [6] - Non-GAAP net income per share was $2.71, up 3% [23] - Adjusted free cash flow was $209 million [25] Business Line Data and Key Metrics Changes - Small Business delivered double-digit growth in top line and gross profit, driven by cloud and client device solutions [9] - Corporate delivered mid-single-digit top line growth with low single-digit gross profit [9] - Government net sales increased 8%, with state and local showing double-digit growth [10] - Healthcare gross profit grew faster than its 7% top line growth, driven by cloud solutions [11] - Services grew 9% top line, with managed and professional services up 14% [60] Market Data and Key Metrics Changes - U.K. and Canadian operations reported a 9% increase in net sales [11] - Demand for client devices remained strong, driven by Windows 10 end-of-life transitions [20] - Netted down revenues represented 36% of gross profit, up from 35.7% in Q3 2024 [20] Company Strategy and Development Direction - The company is embedding AI into its operations to enhance productivity and efficiency [15] - Focus on delivering enterprise-grade AI solutions that are practical and scalable [16] - Maintaining a prudent full-year outlook with expectations for low single-digit growth in the U.S. IT market [17] Management's Comments on Operating Environment and Future Outlook - The current environment is characterized by volatility and uncertainty, impacting investment decisions [50] - The company is navigating a complex environment with a focus on execution and customer value [28] - Expectation for continued frictional impacts in government education segments and potential funding shortfalls in healthcare [28] Other Important Information - Non-GAAP SG&A totaled $725 million, up 8.7% year-over-year [21] - The company returned approximately $150 million in share repurchases and $82 million in dividends [25] - The dividend was increased by approximately 1% to $2.52 annually [26] Q&A Session Summary Question: Impact of government shutdown on federal contribution - Management has taken a conservative view of Q4, expecting some pipeline and backlog but acknowledging constraints due to the shutdown [34][35] Question: Drivers of small business growth - Small businesses are leaning more into technology for competitive advantage, showing resilience [37][39] Question: Outlook for PC and endpoint market - Solid demand is expected to continue in the near term, driven by Windows 10 end-of-life and AI productivity initiatives [42][43] Question: Complexity of current spending environment - The primary issue is volatility and uncertainty affecting investment commitments [50][52] Question: Healthcare market dynamics - Healthcare has been strong, but funding shifts may create some lumpiness in growth [78] Question: Profitability and margin outlook - Non-netted down margins have held up, with expectations for stability in Q4 [81]

Financial Data and Key Metrics Changes - Third quarter consolidated net sales were $5.7 billion, up 4% year-over-year [6] - Gross profit was $1.3 billion, up 5% [6] - Non-GAAP operating income was $531 million, down 1% [6] - Non-GAAP net income per share was $2.71, up 3% [23] - Adjusted free cash flow was $209 million [25] Business Line Data and Key Metrics Changes - Small Business delivered double-digit growth in top line and gross profit, driven by cloud and client device solutions [9] - Corporate delivered mid-single-digit top line growth with low single-digit gross profit [9] - Government net sales increased 8%, with state and local showing double-digit growth [10] - Healthcare gross profit grew faster than its 7% top line growth, driven by cloud solutions [11] - Services segment grew 9% top line, with managed and professional services up 14% [14][60] Market Data and Key Metrics Changes - U.K. and Canadian operations reported a 9% increase in net sales [11] - Demand for client devices remained strong, with a 7% growth rate [13] - Software sales increased by 4%, driven by cloud and security offerings [13] Company Strategy and Development Direction - The company is focused on embedding AI into operations to enhance productivity and efficiency [15] - Strategic investments are aimed at improving customer-facing capabilities and internal operations [14] - The company maintains a prudent full-year outlook, expecting low single-digit growth in the U.S. IT market [17][29] Management's Comments on Operating Environment and Future Outlook - Management highlighted the complexity and volatility of the current operating environment, impacting customer investment decisions [51] - The company is cautious about the potential impacts of the government shutdown on federal results and other markets [17] - Despite uncertainties, management remains confident in the company's strategy and ability to deliver customer value [18] Other Important Information - The company returned approximately $150 million in share repurchases and $82 million in dividends [25] - The dividend was increased by approximately 1% to $2.52 annually, marking the 12th consecutive year of increases [26] Q&A Session Summary Question: Impact of the government shutdown on guidance - Management has taken a conservative view of Q4, anticipating some pipeline and backlog but acknowledging constraints due to the shutdown [34][35] Question: Drivers of small business growth - Small businesses are leaning more into technology for competitive advantage, showing resilience and strong execution [37] Question: Outlook for the PC and endpoint market - Demand for PCs is expected to remain solid in the near term, driven by Windows 10 end-of-life transitions and AI productivity initiatives [42][43] Question: Complexity of the current spending environment - The primary challenge is volatility and uncertainty, affecting investment commitments from customers [51] Question: Healthcare market dynamics - Management is monitoring funding shifts and their potential impact on healthcare, but remains confident in long-term relationships and technology investments [78]

Financial Data and Key Metrics Changes - Consolidated net sales for the third quarter were $5.7 billion, up 4% year-over-year [7] - Gross profit increased to $1.3 billion, reflecting a 5% growth [7] - Non-GAAP operating income was approximately $531 million, down 1% [7] - Non-GAAP net income per share was $2.71, up 3% [7] - Adjusted free cash flow for the quarter was $209 million, totaling $668 million year-to-date [33] Business Line Data and Key Metrics Changes - Small business segment delivered double-digit growth in both top line and gross profit, driven by cloud and client device solutions [12] - Corporate segment achieved mid-single-digit top line growth, with low single-digit gross profit growth [12] - Government net sales increased by 8%, with state and local delivering double-digit growth [13] - Healthcare gross profit grew faster than its 7% top line growth, driven by cloud solutions [15] - Services segment saw a 9% increase in top line, with managed and professional services growing 14% [18][75] Market Data and Key Metrics Changes - U.S. IT market growth is expected to be in the low single digits, with CDW targeting a growth premium of 200 to 300 basis points [24] - U.K. and Canadian operations reported a 9% increase in net sales [16] - Demand for client devices remained strong, driven by the end of Windows 10 support [28] Company Strategy and Development Direction - The company is embedding AI into its operations to enhance productivity and efficiency [20] - Focus on delivering enterprise-grade AI solutions to help customers unlock value [21] - The strategy emphasizes a full stack, full lifecycle approach to meet customer needs [106] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the impact of the government shutdown on federal results and other end markets [24][46] - The current environment is characterized by volatility and uncertainty, affecting investment decisions [62][66] - The company maintains a prudent outlook for the remainder of the year, expecting low single-digit growth in the IT market [38] Other Important Information - Non-GAAP SG&A expenses totaled $725 million, up 8.7% year-over-year [30] - The company returned approximately $150 million in share repurchases and $82 million in dividends [34] - A 1% increase in the annual dividend was announced, marking the twelfth consecutive year of increases [35] Q&A Session Summary Question: Impact of the government shutdown on federal contributions - Management indicated a conservative view for Q4, acknowledging that the shutdown could impact pipeline and backlog but historically, lost sales are often just a timing issue [44][46] Question: Drivers of small business growth - Small businesses are increasingly leaning into technology for competitive advantage, showing resilience and strong execution from the team [49][50] Question: Outlook for the PC and endpoint market - Demand for PCs is expected to remain solid in the near term, driven by Windows 10 end-of-life transitions and AI productivity initiatives [54][55] Question: Complexity of the current spending environment - The primary challenge is volatility and uncertainty, which has led to hesitancy in making larger technology investments [62][66] Question: Healthcare market dynamics - Management noted that healthcare has been strong but is monitoring potential funding shifts that could impact growth [94][96]

Financial Data and Key Metrics Changes - Third quarter consolidated net sales were $5.7 billion, up 4% year-over-year [5][19] - Gross profit was $1.3 billion, up 5% [5][19] - Non-GAAP operating income was $531 million, down 1% [5][24] - Non-GAAP net income per share was $2.71, up 3% [5][25] - Adjusted free cash flow was $209 million [5][26] - Gross margin was 21.9%, up 10 basis points year-over-year [20][24] Business Line Data and Key Metrics Changes - Small business delivered double-digit growth in top line and gross profit, driven by cloud and client device solutions [8][9] - Corporate delivered mid-single-digit top line growth with low single-digit gross profit [9] - Government net sales increased 8%, with state and local showing double-digit growth [9][10] - Education net sales declined 9%, with higher education growth offset by K-12 decline [10] - Services grew 9% in top line, contributing 9% of total CDW top line [12][19] Market Data and Key Metrics Changes - U.K. and Canadian operations reported a 9% increase in net sales [10][11] - Healthcare gross profit grew faster than its 7% top line growth, driven by cloud solutions [10] - Demand for client devices increased mid-single digits in top line and double digits in gross profit [9][11] Company Strategy and Development Direction - The company is embedding AI into operations to drive productivity and efficiency [14][15] - Focus on delivering enterprise-grade AI solutions to help customers unlock value [15][17] - Maintaining a prudent full-year outlook with expectations of low single-digit growth in the U.S. IT market [17][30] Management's Comments on Operating Environment and Future Outlook - Management highlighted the complexity and volatility of the current operating environment, impacting customer investment decisions [44] - The company is navigating uncertainties such as government shutdowns and economic conditions while focusing on execution [18][30] - Expectations for 2026 are still being planned, with a focus on maintaining competitive strength [18][31] Other Important Information - Non-GAAP SG&A totaled $725 million, up 8.7% year-over-year [23][24] - The company returned approximately $150 million in share repurchases and $82 million in dividends [26][28] - The dividend was increased by approximately 1% to $2.52 annually [28] Q&A Session Summary Question: Impact of government shutdown on federal contributions - Management acknowledged a conservative view for Q4, anticipating some pipeline and backlog but recognizing constraints from agencies not open [35][36] Question: Drivers of small business growth - Small businesses are leaning more into technology for competitive advantage, showing resilience and strong execution [37][38] Question: Outlook for PC and endpoint market - Demand remains solid, driven by Windows 10 end-of-life transitions and AI productivity initiatives [39][40] Question: Federal funding for education and healthcare - Federal funding for K-12 is primarily state-funded, while higher education is focused on technology to attract students [41][42] Question: Complexity of the current spending environment - The primary issue is volatility and uncertainty, affecting investment commitments [44] Question: Gross profit dollar growth needed for EPS growth - Sustaining gross profit growth and focusing on operating leverage are essential for returning to high single-digit EPS growth [46][47] Question: Opportunities in services and M&A - Strong growth in services is expected, with a focus on data, AI, and cloud [49][50]

Core Insights - CDW reported quarterly earnings of $2.71 per share, exceeding the Zacks Consensus Estimate of $2.62 per share, and showing an increase from $2.63 per share a year ago, resulting in an earnings surprise of +3.44% [1] - The company achieved revenues of $5.74 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.86% and up from $5.52 billion year-over-year [2] - CDW has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] Earnings and Revenue Performance - The earnings surprise for the previous quarter was +4.42%, with actual earnings of $2.60 per share compared to an expected $2.49 per share [1] - The current consensus EPS estimate for the upcoming quarter is $2.51, with projected revenues of $5.16 billion, while the estimate for the current fiscal year is $9.86 on $22.03 billion in revenues [7] Market Position and Outlook - CDW shares have underperformed the market, losing about 11% since the beginning of the year, while the S&P 500 has gained 16.5% [3] - The company's Zacks Rank is currently 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [6] - The Computers - IT Services industry, to which CDW belongs, is currently in the top 28% of Zacks industries, indicating a favorable industry outlook [8]

Core Insights - CDW exceeded Wall Street profit estimates for the third quarter, driven by increased technology budgets from enterprise customers and a growing adoption of artificial intelligence in cloud services [1] Group 1: Financial Performance - CDW reported a profit that surpassed Wall Street expectations for the third quarter [1] - The increase in enterprise customers' technology budgets contributed significantly to the company's financial success [1] Group 2: Market Trends - There is a notable trend of enterprise customers embracing artificial intelligence and cloud adoption, which is positively impacting CDW's business [1]