CDW's Challenging Quarter: Missed Sales Targets, Decline Across Key Segments
Portfolio Pulse from Anusuya Lahiri
CDW Corp reported disappointing fiscal first-quarter 2024 results with a 4.5% Y/Y decline in net sales to $4.87 billion, missing the consensus of $5.00 billion. Adjusted EPS was $1.92, below the consensus of $2.15. Sales declined across Total Corporate, Total Small Business, and Total Public segments, with a notable 10.4% Y/Y decrease in Education customer sales. Despite these challenges, CDW declared a quarterly cash dividend of 62 cents per share and remains optimistic about exceeding US IT market growth. CDW shares fell 10.2%, but the stock has gained 42% in the last 12 months. Exposure to CDW can also be gained through Argent Mid Cap ETF (AMID) and Professionally Managed Portfolios Congress SMid Growth ETF (CSMD).
May 01, 2024 | 4:47 pm
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NEGATIVE IMPACT
Argent Mid Cap ETF, which includes CDW in its portfolio, may experience indirect impact due to CDW's disappointing earnings, given CDW's significant performance over the last 12 months.
As CDW is part of the Argent Mid Cap ETF's portfolio, the negative earnings report from CDW could indirectly affect AMID's performance, especially considering CDW's strong performance over the past year. However, the diversified nature of ETFs may mitigate the impact.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 50
NEGATIVE IMPACT
CDW Corp reported lower-than-expected Q1 2024 results, with a significant decline in sales and adjusted EPS, leading to a 10.2% drop in its stock price. However, the company declared a quarterly dividend of 62 cents.
The significant miss in both sales and EPS benchmarks directly impacts investor confidence and stock valuation, leading to a negative short-term price movement. The dividend declaration may provide some support, but the overall negative earnings report is likely to outweigh this positive aspect in the short term.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100
NEGATIVE IMPACT
Professionally Managed Portfolios Congress SMid Growth ETF, which includes CDW, might see an indirect impact from CDW's poor Q1 2024 performance.
Given CDW's inclusion in CSMD's portfolio, the disappointing earnings could indirectly affect CSMD's performance. The effect might be mitigated by the ETF's diversified portfolio, but the negative news from a significant holding like CDW is likely to have some impact.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 50