CDW Q2 Earnings on the Horizon: Can it Deliver Another Beat?

The consensus estimate for earnings is pegged at $2.80 per share, up 1.3% in the past 60 days, indicating a 7.7% increase from the year-ago quarter’s reported figure. Management expects second-quarter non-GAAP net income per share to be in the high single digits year over year.

CDW’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 3.3%.

Key Factors Investors Should Watch for CDW’s Q2 Earnings

CDW’s second-quarter performance is expected to have been driven by customer demand across corporate, government, education and healthcare markets, as well as the company's ability to capitalize on AI-driven infrastructure investment, despite ongoing macroeconomic uncertainty. AI continues to reshape enterprise technology investments. Companies are increasingly deploying AI-ready servers, high-performance storage, networking equipment and data center infrastructure. CDW, with its broad portfolio of hardware, software and IT services, is well-positioned to benefit from this trend.

The company expects strong performance in the to-be-reported quarter and beyond, driven by backlog and customer activity. Supply chain and demand uncertainties remain, but the outlook is cautiously optimistic with a focus on quarterly results. CDW expects second-quarter non-GAAP SG&A expenses to be modestly higher sequentially. However, operating expenses as a percentage of gross profit are projected to decline sequentially due to seasonal factors and remain broadly in line with the year-ago second quarter.

Government, education, commercial, international and healthcare customers account for a lion’s share of CDW's revenue. First-quarter results demonstrated this diversification, with commercial growth of nearly 10%, government growth of almost 5%, education growth of 3% and international growth of 17.9%. Corporate, healthcare and financial services customers all contributed to commercial expansion, while double-digit growth in state and local government offset weakness in federal spending. K-12 demand remained healthy despite difficult comparisons, and both the U.K. and Canada delivered double-digit growth.

For the second quarter, we expect revenues from Total Commercial, Government and Education to be $3.9 billion, $685 million and $916.7 million, respectively. Revenues from the International part are estimated to be $627 million, down 6.7%.

The company anticipates a more balanced demand environment in the second half, with no significant demand destruction expected. CDW expects netted-down revenues, along with professional and managed services, to gain momentum in the second half of 2026 and continue to outpace overall business growth in the long term. Hardware shipment delays keep backlog elevated. Meanwhile, higher-value AI deals and expanding professional and managed services are expected to support recurring revenue and drive margin expansion over time.

Management remains committed to maintaining leverage within its targeted 2X-3X range while evaluating acquisition opportunities aligned with its growth strategy. In addition, Geared for Growth initiatives are expected to begin contributing productivity benefits in the second half of 2026. In May, the board authorized an additional $1 billion for share repurchases, increasing its total remaining buyback capacity to approximately $1.48 billion from the amount remaining as of March 31, 2026. Future authorizations remain subject to board approval.

Potential variability remains tied to recession risks, geopolitical developments, pricing volatility and additional supply disruptions that could alter customer purchasing patterns, weighing on CDW’s overall performance.

What Our Model Displays for CDW

Our proven model predicts 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 exactly the case here.

CDW currently has an Earnings ESP of +0.95% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

Here are three other stocks you may want to consider, as our model shows that these too have the right elements to post an earnings beat in this reporting cycle.

Arista Networks ANET currently has an Earnings ESP of +3.08% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. 

ANET is scheduled to report quarterly earnings on Aug. 4. The Zacks Consensus Estimate for ANET’s to-be-reported quarter’s earnings and revenues is pegged at 89 cents per share and $2.83 billion, respectively. Shares of ANET have gained 39% in the past year.

Caterpillar CAT presently has an Earnings ESP of +4.96% and a Zacks Rank #3. CAT is scheduled to report quarterly numbers on Aug. 4. The Zacks Consensus Estimate for Caterpillar’s to-be-reported quarter’s earnings and revenues is pegged at $6.25 per share and $19.31 billion, respectively. Shares of CAT have risen 93.7% in the past year.

Advanced Micro Devices, Inc. AMD has an Earnings ESP of +1.56% and a Zacks Rank #2 at present. AMD is scheduled to report quarterly figures on Aug. 4. The Zacks Consensus Estimate for AMD’s to-be-reported quarter’s earnings and revenues is pegged at $1.61 per share and $11.32 billion, respectively. Shares of AMD have skyrocketed 153.3% in the past year.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research