Core Insights - Madison Investments reported a 3.43% appreciation for the Madison Large Cap Fund in Q4 2025, outperforming the S&P 500's 2.65% return, with the S&P 500 achieving a full-year return of 17.9% for 2025 [1] Group 1: Market Performance - The S&P 500 returned 2.65% in Q4 2025, leading to a full-year return of 17.9% [1] - Over the last three years, the S&P 500 has achieved annual growth of over 21% [1] - Market leadership was characterized by High Beta and Momentum factors, with narrow participation [1] Group 2: Sector Performance - There were slight improvements in previously lagging sectors such as Healthcare, Financials, and Consumer Discretionary during Q4 2025 [1] - Mega-cap technology companies remained the primary drivers of the S&P 500's overall return, indicating high stock concentration [1] Group 3: Company-Specific Insights - Texas Instruments Incorporated (NASDAQ:TXN) had a market capitalization of $193.855 billion and closed at $213.35 per share on February 24, 2026 [2] - Texas Instruments' stock experienced a one-month return of -1.30% but gained 7.62% over the past 52 weeks [2] - Despite reporting strong results, Texas Instruments was among the bottom five detractors for the quarter, as investors expected quicker growth recovery [3] Group 4: Hedge Fund Interest - Texas Instruments was held by 78 hedge fund portfolios at the end of Q4 2025, an increase from 72 in the previous quarter [4] - While Texas Instruments is recognized for its potential, certain AI stocks are believed to offer greater upside potential with less downside risk [4]

Madison Investments, an investment advisor, released its fourth-quarter 2025 investor letter for the “Madison Large Cap Fund”. A copy of the letter can be downloaded here. In the fourth quarter, the S&P 500 returned 2.65%, resulting in a full-year return of 17.9% for 2025. Over the last three years, the Index has achieved annual growth of over 21%. Following the recent trends, market leadership was defined by High Beta and Momentum factors, with narrow participation. However, in the fourth quarter, the mark ...

Core Insights - Madison Investments reported a 3.43% appreciation for the Madison Large Cap Fund in Q4 2025, outperforming the S&P 500's 2.65% return [1] - The S&P 500 achieved a full-year return of 17.9% for 2025, with a three-year annual growth rate exceeding 21% [1] - Market leadership was characterized by High Beta and Momentum factors, with notable improvements in Healthcare, Financials, and Consumer Discretionary sectors [1] Company Summary: CDW Corporation - CDW Corporation, an IT solutions company, had a market capitalization of $16.138 billion and closed at $123.13 per share on February 23, 2026 [2][4] - The stock experienced a one-month return of -3.35% and a 52-week decline of 34.05% [2] - In Q4 2025, CDW reported consolidated net sales of $5.5 billion, reflecting a 5% increase from Q4 2024 [4] Performance Analysis - CDW Corporation was listed among the bottom five detractors for the Madison Large Cap Fund in Q4 2025, with revenue growth improving but operating expenses rising faster, leading to muted earnings growth [3] - Despite the challenges, there is a belief that expenses will stabilize, allowing for a rebound in earnings growth in the long term [3] - CDW Corporation was included in 57 hedge fund portfolios at the end of Q4 2025, an increase from 48 in the previous quarter [4]

Company Overview - CDW Corporation is valued at a market cap of $16.5 billion and is a leading North American IT solutions provider, assisting organizations in designing, procuring, implementing, and managing technology infrastructure [1] Stock Performance - CDW shares have underperformed the broader market over the past 52 weeks, declining 33.9%, while the S&P 500 Index has increased by 11.9% [2] - Year-to-date, CDW stock has dropped 8.1%, contrasting with a marginal decline in the S&P 500 [2] - Compared to the State Street Technology Select Sector SPDR Fund, which saw a 16.3% increase over the past 52 weeks, CDW's performance has lagged [3] Recent Financial Results - On February 4, CDW reported Q4 2025 results that exceeded expectations, with revenue rising 6% year-over-year to $5.5 billion and non-GAAP EPS of $2.57 surpassing consensus forecasts [5] - The gross profit margin expanded to 22.8%, driven by a shift towards higher-value offerings, despite slight pressure on operating margins from increased SG&A investments [5] Future Earnings Expectations - For the fiscal year ending December 2026, analysts project CDW's EPS to increase by 4.3% year-over-year to $9.94, with a history of beating consensus estimates in the last four quarters [6] - The consensus rating among 12 analysts covering the stock is a "Moderate Buy," consisting of six "Strong Buy" and six "Hold" ratings [6] Analyst Ratings - The current consensus is more bullish than three months ago, when there were five "Strong Buy" suggestions [7] - Citigroup analyst Asiya Merchant maintained a "Neutral" rating on CDW and slightly raised the price target to $150 from $148 [7]

Core Insights - CDW's fourth-quarter performance exceeded expectations, driven by strong growth in software, cloud, and professional managed services, leading to the highest gross margin of the year at 22.8% [3][5][7] Financial Performance - For Q4, CDW reported net sales of $5.5 billion, a 5% increase year over year, with gross profit ranging from $1.25 billion to $1.3 billion, reflecting a 9% increase [4][7] - Non-GAAP diluted EPS for the quarter was $2.57, up 4%, while non-GAAP operating income was approximately $502 million to $503 million, up roughly 1% [4][7] Market Dynamics - The company anticipates a low-single-digit growth in the U.S. IT market for 2026, targeting 200 to 300 basis points of outperformance [5][18] - CDW's revenue mix is shifting towards higher-margin categories such as cloud and SaaS, with netted down revenues representing 36.1% of gross profit in Q4, up from 35.8% year over year [13] Segment Performance - Double-digit growth was observed in software, cloud, and professional managed services, with cloud contributing approximately half of the gross profit growth for the quarter [3][9] - Small business sales grew by 18%, driven by cloud consumption and modernization of client devices, while corporate sales declined by 1% due to slowing hardware solutions [8][11] Operational Efficiency - Non-GAAP SG&A expenses increased by 14.6% year over year to $752 million, primarily due to higher commissions and performance-based expenses [14] - Adjusted free cash flow for Q4 was $418 million, with a full-year total of $1.09 billion, representing 82% of non-GAAP net income [15] Capital Allocation - CDW returned nearly $1 billion to shareholders in 2025 through dividends and share repurchases, exceeding its initial target of 50% to 75% of adjusted free cash flow [17] - The company plans to continue returning 50% to 75% of adjusted free cash flow to shareholders in 2026 while remaining active in M&A [17]

Market Performance - The broad U.S. market started the year positively, with the SPDR® S&P 500® ETF (SPY) posting a gain despite some elevated volatility in the final week of January [1]

分组1 - Celestica reported quarterly earnings of $1.89 per share, exceeding the Zacks Consensus Estimate of $1.74 per share, and showing a significant increase from $1.11 per share a year ago, resulting in an earnings surprise of +8.62% [1] - The company achieved revenues of $3.65 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 5.46%, and up from $2.55 billion in the same quarter last year [2] - Celestica has consistently outperformed consensus EPS and revenue estimates over the last four quarters, indicating strong operational performance [2] 分组2 - The stock has gained approximately 12.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.9% [3] - The current consensus EPS estimate for the upcoming quarter is $1.83 on revenues of $3.59 billion, while for the current fiscal year, the estimate is $8.21 on revenues of $16.01 billion [7] - The Electronics - Manufacturing Services industry, to which Celestica belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8]

Summary of Earnings Conference Call Insights Industry Overview - **Industry Focus**: US Enterprise Hardware and Networking - **Key Trends**: AI infrastructure investments are expected to drive earnings per share (EPS) beats for select companies, while traditional demand remains uneven. Strong performance is anticipated in AI-centric data centers, supported by robust financial results from vendors like Ciena and EMS providers such as Jabil and TD SYNNEX [2][4]. Company-Specific Insights Arista Networks (ANET) - **Performance Expectations**: Anticipated revenue for December quarter is $2.42 billion, approximately 3% above the estimate of $2.35 billion, reflecting a 25% year-over-year growth against a guide of 19% to 24% [10][11]. - **EPS Forecast**: Expected diluted EPS of ~$0.79, which is a 5% beat compared to the estimate of $0.75 [10][11]. - **Revenue Guidance**: Expected to raise the CY26 revenue guidance to 22% growth from the previous 20% due to strong AI investments and $2.5 billion in deferred revenue entering the December quarter [18][19]. - **Historical Performance**: Over the past five years, Arista has consistently exceeded revenue guidance by an average of 4% in the December quarter [7][13]. - **Operating Margins**: Expected operating margin of at least 48.3%, which is approximately 150 basis points above the estimate of 46.8% [11]. IBM - **Revenue Expectations**: Anticipated revenue of $19.2 billion for the December quarter, in line with consensus estimates [22][25]. - **Segment Performance**: Expected constant currency growth of ~9% in Software, ~2% in Consulting, and ~6% in Infrastructure [22][24]. - **EPS Forecast**: Expected adjusted EPS of $4.29, slightly below consensus of $4.30 [23][25]. - **Future Guidance**: Anticipated guidance for CY26 revenue growth of 5+%, including a contribution from the pending Confluent acquisition [39][42]. Celestica (CLS) - **Revenue Expectations**: Projected revenue of $3.61 billion for the December quarter, which is 3% to 4% above the guide, driven by strong demand for AI back-end 800G switches [49][54]. - **EPS Forecast**: Expected adjusted EPS of $1.86, approximately 7.5% above the midpoint of the company outlook [49][54]. - **Future Guidance**: Anticipated increase in CY26 revenue and EPS guidance to $16.5 billion and $8.70 respectively, reflecting strong demand in both HPS switching and TPU/Compute [62][63]. Extreme Networks (EXTM) - **Performance Expectations**: Continued strength in wired and wireless markets is expected to support upside in December quarter revenue and EPS estimates [68]. Lumentum - **Revenue Expectations**: Expected revenue to exceed estimates by at least 5%, driven by strong demand for laser chips and transceivers [4]. Key Takeaways - **AI Investment Impact**: Companies like Arista, Celestica, and Lumentum are well-positioned to benefit from AI infrastructure investments, with expectations of revenue and EPS beats [2][4]. - **Market Sentiment**: Investor expectations for Celestica and Lumentum are notably high, while Arista's expectations are more modest, indicating a preference for Arista based on its conservative outlook [2][4]. - **Guidance Trends**: Companies are expected to provide optimistic guidance for the upcoming quarters, reflecting confidence in sustained demand and operational efficiency [18][19][59]. Additional Insights - **Market Dynamics**: The anticipated price increases by customers may lead to a slight demand pull-in, impacting orders positively for companies like Extreme Networks [68]. - **Operational Efficiency**: Companies are maintaining tight control over operating expenses, which is expected to enhance margins despite potential revenue mix challenges [11][23].

Core Insights - Booz Allen Hamilton Holding Corporation (BAH) is a management and information technology consulting firm primarily serving the U.S. government in defense, intelligence, and civil markets [1] - BAH competes with companies such as Leidos Holdings, CACI International, Science Applications International Corporation, Huntington Ingalls Industries, and CDW Corporation [1] Financial Performance - BAH's Return on Invested Capital (ROIC) is 18.09%, significantly higher than its Weighted Average Cost of Capital (WACC) of 5.00%, resulting in a ROIC to WACC ratio of 3.62, indicating efficient capital utilization [2][6] - Leidos Holdings, Inc. (LDOS) has a ROIC of 14.77% and a WACC of 5.98%, leading to a ROIC to WACC ratio of 2.47, which is lower than BAH's [3] - CACI International Inc (CACI) shows a ROIC of 8.62% against a WACC of 6.12%, with a ratio of 1.41, indicating less effective capital utilization compared to BAH [3] - Science Applications International Corporation (SAIC) has a ROIC of 11.27% and a WACC of 4.84%, resulting in a ROIC to WACC ratio of 2.33, still below BAH's efficiency [4] - Huntington Ingalls Industries, Inc. (HII) has the lowest ratio of 0.94, with a ROIC of 4.79% and a WACC of 5.12%, suggesting its returns barely cover its cost of capital [4] - CDW Corporation (CDW) presents a ROIC of 12.25% and a WACC of 7.35%, resulting in a ROIC to WACC ratio of 1.67, which is not as efficient as BAH [5] Competitive Advantage - BAH's superior ROIC to WACC ratio makes it an attractive option for investors seeking strong financial performance compared to its peers [5][6]

Group 1: Stock Market Movements - Logitech (LOGI), NetApp (NTAP), and CDW (CDW) saw declines of 6%, 4%, and 2% respectively after Morgan Stanley downgraded all three, citing a "perfect storm" for IT hardware due to the slowest corporate spending in 15 years outside of COVID-19 [4] - The downgrade was influenced by a 4Q CIO survey indicating softer demand, with resellers expecting 30%-60% of customers to cut budgets for PCs, servers, and storage amid rising component prices [4][5] - The hardware down-cycle is expected to last three to five quarters, with CDW downgraded to Equal-Weight (PT $141), Logitech to Underweight (PT $89), and NetApp to Underweight (PT $89) [5] Group 2: NYSE Developments - The New York Stock Exchange (NYSE) is developing a platform for 24/7 trading of tokenized U.S.-listed equities and ETFs using blockchain technology [5][6] - This platform aims to enable instant settlement, dollar-sized orders, and stablecoin-based funding, although the launch date has not been disclosed [6] - The initiative is part of Intercontinental Exchange's (ICE) broader digital strategy, which includes enhancing clearing infrastructure for 24/7 trading and supporting tokenized deposits [7][8] Group 3: Tesla and EV Market - Tesla (TSLA) is expected to benefit from Canada's decision to reduce tariffs on Chinese-made electric vehicles (EVs) from 100% to 6.1%, allowing 49,000 EVs to be imported annually [9][10] - The EV quota may increase to 70,000 within five years, with half reserved for vehicles priced under C$35,000 ($25,192), which does not include Tesla's models [11] - Tesla's largest plant in Shanghai is already equipped to produce a Canada-specific version of its Model Y, which was previously shipped to Canada before the tariff imposition [10]