Revenue Beat: CDW Corporation Exceeded Revenue Forecasts By 9.1% And Analysts Are Updating Their Estimates
It's been a good week for CDW Corporation (NASDAQ:CDW) shareholders, because the company has just released its latest third-quarter results, and the shares gained 2.1% to US$157. It was a workmanlike result, with revenues of US$6.8b coming in 9.1% ahead of expectations, and statutory earnings per share of US$2.46, in line with analyst appraisals. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, CDW's nine analysts are now forecasting revenues of US$26.4b in 2027. This would be a credible 7.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to step up 16% to US$10.23. Before this earnings report, the analysts had been forecasting revenues of US$25.2b and earnings per share (EPS) of US$10.12 in 2027. There doesn't appear to have been a major change in sentiment following the results, other than the small increase to revenue estimates.
See our latest analysis for CDW
The analysts increased their price target 16% to US$184, perhaps signalling that higher revenues are a strong leading indicator for CDW's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic CDW analyst has a price target of US$195 per share, while the most pessimistic values it at US$148. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that CDW's rate of growth is expected to accelerate meaningfully, with the forecast 6.1% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 0.9% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 14% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, CDW is expected to grow slower than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for CDW going out to 2028, and you can see them free on our platform here.
Even so, be aware that CDW is showing 1 warning sign in our investment analysis , you should know about...
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