Despite being a leader in integrated information technology (IT) solutions, CDW Corporation CDW reported subpar Q3 results at the end of October, leading to a drop in earnings estimate revisions.

Down nearly -20% year to date, CDW's stock lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day as more downside risk may be ahead.

CDW’s Subpar Q3 Results

Weighing on investor sentiment, CDW shares have plummeted sharply over the last month after Q3 earnings of $2.63 per share missed the Zacks EPS Consensus of $2.84 by -7%. Year over year, CDW’s bottom line contracted from $2.72 a share in Q3 2023. Furthermore, CDW has missed earnings expectations in three of its last four quarterly reports with an average EPS surprise of -4.73% during this period.

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This came as CDW’s Q3 sales dipped to $5.51 billion compared to $5.62 billion in the comparative quarter and missed estimates of $5.71 billion by -3%. CDW has also missed top line estimates in three of the last four quarters with an average sales surprise of -2.67%. 

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Slower Demand & Increased Competition

Notably, CDW attributed its subpar Q3 results to economic uncertainty and growing complexity in the technology landscape, resulting in slower customer decision-making and project delays.

CDW also alluded to increased competition and pricing intensity across all of its end markets with a few of its notable competitors being Accenture ACN, Dell Technologies DELL, and IBM IBM.

Declining EPS Estimates

Suggesting the decline in CDW’s stock could continue is that fiscal 2024 earnings estimates have fallen 5% in the last 30 days to $9.46 per share compared to EPS estimates of $9.97 a month ago. More concerning and taking away from CDW’s growth narrative is that FY25 EPS estimates have dipped more than 2% in the last month.

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Bottom Line

Operating in a competitive landscape, it may be best to avoid CDW’s stock for now. To that point, CDW may be losing mojo but there are more appealing options in its broader Zacks Computers-IT Services Industry which is in the top 19% out of 250 Zacks industries.

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