Factors at Play
CDW specializes in offering information technology products and services to business, government, education and healthcare customers, primarily in the U.S. and Canada.
The company reported better-than-expected second-quarter 2016 results wherein both the top and the bottom line beat the Zacks Consensus Estimate.
Growth in customer channels and consistent strategic achievements are a couple of positive factors that should drive the company’s performance in the to-be reported quarter. Additionally, CDW’s robust product portfolio and product refreshes are positives.
The company’s exposure in the high-end corporate desktop and digital education implementation space is encouraging. Moreover, its focus on small & medium businesses and customer additions help in expanding its market share.
However, a highly leveraged balance sheet, competition from Insight Enterprises Inc. NSIT and PC Connection, Inc., and pricing pressure remain headwinds.
CDW CORP Price and EPS Surprise
Our proven model does not conclusively show that CDW is likely to beat the Zacks Consensus Estimate in the upcoming release. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for CDW is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 85 cents per share. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: CDW has a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Carmike Cinemas Inc. CKEC with Earnings ESP of +166.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here
Freshpet, Inc. FRPT with an Earnings ESP of +100.0% and a Zacks Rank #3
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