CDW Corporation (NASDAQ:CDW) is set to report second-quarter 2016 results on Aug 3. Last quarter, the company posted in-line results. Let us see how things are shaping up for this announcement.
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 modest first-quarter 2016 results wherein the top line beat the Zacks Consensus Estimate while the bottom line matched the same.
Growth in customer channels and consistent strategic achievements are a couple of positive factors that should drive the company’s performance. Additionally, CDW’s robust product portfolio and product refreshes continue to drive growth.
The company’s exposure in the high-end corporate desktop and digital education implementation space also remains a positive. Moreover, its strong position with medium to large businesses, focus on small & medium businesses and customer additions helping to grow market share are encouraging.
However, a highly leveraged balance sheet, competition from Insight Enterprises Inc. (NASDAQ:NSIT) and PC Connection, Inc., and pricing pressure remain headwinds.
Earnings Whispers?
Our proven model does not conclusively show that CDW will beat earnings this quarter. 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. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 81 cents. Hence, ESP, the difference between the two measures, is 0.00%.
Zacks Rank: CDW’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are a couple of companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Paycom Software, Inc. (NYSE:PAYC) with an Earnings ESP of +7.69% and a Zacks Rank #3
Qualys, Inc. (NASDAQ:QLYS) with Earnings ESP of +12.50% and a Zacks Rank #3
PAYCOM SOFTWARE (PAYC): Free Stock Analysis Report
QUALYS INC (QLYS): Free Stock Analysis Report
INSIGHT ENTRPRS (NSIT): Free Stock Analysis Report
CDW CORP (CDW): Free Stock Analysis Report
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