Earnings Miss: CDW Corporation Missed EPS By 13% And Analysts Are Revising Their Forecasts

It's shaping up to be a tough period for CDW Corporation (NASDAQ:CDW), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$4.9b, statutory earnings missed forecasts by 13%, coming in at just US$1.59 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for CDW

Taking into account the latest results, the current consensus from CDW's ten analysts is for revenues of US$21.7b in 2024. This would reflect a satisfactory 2.7% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 6.0% to US$8.60. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$22.1b and earnings per share (EPS) of US$9.20 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target fell 6.2% to US$251, with the analysts clearly linking lower forecast earnings to the performance of the stock price. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on CDW, with the most bullish analyst valuing it at US$274 and the most bearish at US$232 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting CDW is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the CDW's past performance and to peers in the same industry. It's pretty clear that there is an expectation that CDW's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.6% growth on an annualised basis. This is compared to a historical growth rate of 6.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CDW.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of CDW's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple CDW analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for CDW you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.