CDW Corporation CDW is slated to report third-quarter 2024 results on Oct. 30, before the market opens.

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The Zacks Consensus Estimate for revenues is pegged at $5.73 billion, implying an improvement of 1.8% from the year-ago quarter’s reported figure.

The consensus estimate for earnings is pegged at $2.85 per share, unchanged in the past 60 days, indicating an improvement of 4.8% from the year-ago quarter’s reported figure.

CDW’s earnings missed the Zacks Consensus Estimate in the last two quarters, matched in one and surpassed in the remaining quarter, with the average negative surprise of 1.62%.

CDW Corporation Price and EPS Surprise

CDW Corporation price-eps-surprise | CDW Corporation Quote

Factors at Play for CDW

The continued demand for cloud and security solutions is likely to have driven the top-line performance. Customer spending preferences, including cost optimization, data protection and workforce productivity, are major catalysts driving security and cloud revenues. Sales from the storage category business are likely to have gained from higher spending by clients on efficiency improvement amid exponential data and workload growth. We expect revenues from Data Storage and Servers to increase 7.3% to $617.8 million in the to-be-reported quarter.

Also, the increasing uptake of AI-driven assistance and applications is expected to have acted as a tailwind.

Continued challenging market conditions including geopolitical risks and fluctuations in the UK market present significant headwinds for CDW. A volatile macroeconomic backdrop and complex technological shifts have been driving muted customer spending behavior. The dynamic IT landscape and the rising advent of AI have resulted in delays in customer decision-making. Federal channel revenues have been affected by the impact of the congressional budget. We expect revenues from the Government sales channel to decline 5.2% year over year to $735.2 million.

CDW’s diverse customer base across business, government, education and healthcare sectors in the United States, the United Kingdom and Canada, is likely to provide a cushion amid macroeconomic volatility. For the third quarter, we expect revenues from Corporate and Small Business to be up 2.4% and 3.9%. Revenues from the Education sector are estimated to be up 6.9% bit Healthcare is expected to be down 4.4% year over year.

What Our Model Predicts for CDW

Our proven model does not predict an earnings beat for CDW this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.