Evercore ISI keeps CDW stock Outperform rating on strong results

Evercore ISI has maintained its Outperform rating for CDW Corporation (NASDAQ:CDW) following the company's impressive September quarter earnings report. CDW announced revenue of $6.75 billion and earnings per share of $3.26, surpassing analysts' expectations of $6.17 billion in revenue and $2.96 in earnings per share. The company's hardware segment led the revenue growth, with a 21% increase year-over-year, as server and storage saw more than doubling and NetCom growing 9%.

Client devices experienced a 19% increase due to higher average selling prices, despite a reduction in units sold. CDW's market capitalization stands at $21.21 billion, with a P/E ratio of 20.52, suggesting the stock is undervalued according to InvestingPro analysis. Gross profit increased by 10.3%, with a gross margin of 20.5%, showing a slight decline compared to the previous year but an improvement of 40 basis points from the quarter before.

Operating margins remained steady at 9.2%, up 70 basis points from the quarter before, driven by savings from the Geared for Growth initiative. The company's free cash flow amounted to $506 million, which equals 123% of its adjusted net income. CDW has forecasted a high single-digit growth in IT spending for fiscal 2026, with an expected increase of 300 to 400 basis points.

The company has raised its dividend for 13 consecutive years, demonstrating a commitment to capital allocation along with its growth strategies. Evercore ISI has removed CDW from its Tactical Outperform list following the positive September quarter results. Despite Written orders continuing to outpace invoicing, CDW's infrastructure backlog is expanding.

Services have returned to modest growth. CDW reported stronger-than-expected results for the third quarter of 2026, achieving adjusted earnings of $3.26 per share and revenue of $6.75 billion, outperforming Wall Street forecasts. These developments were disclosed during the company's earnings call, where they addressed investor questions.

The positive earnings report has garnered significant attention from investors due to its implications for CDW's financial health. While analyst reactions to these results have not been detailed, the earnings beat indicates a positive sentiment towards the company. CDW's strong quarterly performance is a significant event for stakeholders monitoring the company's progress.