IT solutions provider CDW (NASDAQGS:CDW) met Wall Streets revenue expectations in Q3 CY2025, with sales up 4% year on year to $5.74 billion. Its non-GAAP profit of $2.71 per share was 3.4% above analysts’ consensus estimates.

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"The team delivered resilient performance in Q3 as we continued to guide customers through evolving market dynamics and deliver mission critical outcomes across the full IT stack and lifecycle," said Christine A. Leahy, chair and chief executive officer, CDW.

Company Overview

Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ: CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $22.1 billion in revenue over the past 12 months, CDW is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s challenging to maintain high growth rates when you’ve already captured a large portion of the addressable market. To expand meaningfully, CDW likely needs to tweak its prices, innovate with new offerings, or enter new markets.

As you can see below, CDW grew its sales at a mediocre 4.1% compounded annual growth rate over the last five years. This shows it couldn’t generate demand in any major way and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. CDW’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, CDW grew its revenue by 4% year on year, and its $5.74 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 2.1% over the next 12 months, similar to its two-year rate. Although this projection implies its newer products and services will catalyze better top-line performance, it is still below the sector average.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

CDW’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 7.4% over the last five years. This profitability was paltry for a business services business and caused by its suboptimal cost structure.

Analyzing the trend in its profitability, CDW’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, CDW generated an operating margin profit margin of 7.7%, down 1 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

CDW’s EPS grew at a solid 9.4% compounded annual growth rate over the last five years, higher than its 4.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For CDW, EPS didn’t budge over the last two years, a regression from its five-year trend. We hope it can revert to earnings growth in the coming years.

In Q3, CDW reported adjusted EPS of $2.71, up from $2.63 in the same quarter last year. This print beat analysts’ estimates by 3.4%. Over the next 12 months, Wall Street expects CDW’s full-year EPS of $9.94 to grow 2.7%.

Key Takeaways from CDW’s Q3 Results

It was good to see CDW beat analysts’ EPS expectations this quarter despite in line revenue. Zooming out, we think this was a decent quarter. The stock remained flat at $155 immediately after reporting.

So do we think CDW is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.