GET DAILY SIGNALSCDW Delivers +17.7% Sales Growth in Q3 on Broad Enterprise Strength
Key Takeaways
- Net sales rose 17.7% year over year to $6.75 billion, well ahead of consensus estimates near $6.1–6.2 billion.
- Non-GAAP earnings per share reached $3.26, up 20.4% year over year and above the roughly $2.92–2.98 consensus.
- GAAP diluted EPS was $2.46, up 11.6%, while net income grew 6.5% to $309.8 million.
- Gross margin compressed to 20.5% from 21.9% a year earlier on product mix shifts, even as non-GAAP operating margin held flat at 9.2%.
- Growth was broad-based, led by the Commercial segment (up 20.8%) and a 73.2% surge in Financial Services customers.
Why These Results Stand Out
CDW Corporation serves as a key indicator for enterprise IT spending, supplying technology solutions to businesses, government, education, and healthcare clients in the U.S., U.K., and Canada. Its third-quarter performance showed clear acceleration, with revenue growth climbing to 17.7% from about 10% in the prior quarter. The gains came mainly from rising enterprise adoption of artificial intelligence along with solid demand for data storage, servers, and notebooks. Given the company’s scale and diverse customer base, the report provides useful insight into conditions across the broader IT distribution space.
The Quarter’s Reported Figures
For the period ended September 30, 2026, CDW posted net sales of $6.75 billion, up 17.7% from $5.74 billion a year earlier and ahead of analyst targets around $6.1–6.2 billion. Net income increased 6.5% to $309.8 million, while GAAP diluted EPS rose 11.6% to $2.46. On a non-GAAP basis that excludes acquisition-related amortization and equity-based compensation, diluted EPS reached $3.26, a 20.4% gain from $2.71 and comfortably above the $2.92–2.98 consensus range.
Performance across segments was generally solid. Commercial sales climbed 20.8% to $3.98 billion, helped by a 73.2% jump in Financial Services customers along with 16.8% growth in Corporate and 9.3% in Healthcare. Government revenue advanced 9.9% to $913 million, Education rose 7.5% to $982 million, and operations in the U.K. and Canada combined grew 26.0% to $880 million.
Margins showed some contrast. Gross profit increased 10.3% to $1.39 billion, yet the gross margin narrowed to 20.5% from 21.9% because of shifts in product mix. Non-GAAP operating income rose 16.8% to $619.8 million, keeping the non-GAAP operating margin steady at 9.2%. The board also approved a quarterly cash dividend of $0.68 per share, payable December 10, 2026.
Investor Response and What Analysts Are Watching
The market reacted positively to the results. Shares moved higher after the release as the revenue beat and faster growth offset concerns about gross-margin pressure and higher costs. The strong top-line performance, supported by enterprise AI spending and steady customer demand, helped reinforce confidence in CDW’s position even in a more competitive pricing environment. Management also raised its full-year outlook for the third straight quarter, which added support. Analysts noted the main areas to monitor include the compressed gross margin, a 19.8% rise in interest expense to $66 million, and an effective tax rate of 26.9%.
Looking Ahead: Factors Worth Tracking
Attention now turns to whether CDW can maintain momentum into the seasonally important fourth quarter. Management raised guidance for the third consecutive time and expressed confidence in continuing to outpace U.S. IT market growth, pointing to sustained enterprise demand. The key question remains how durable AI-related spending on servers, storage, and software will prove to be.
Margin trends will stay in focus. The gross margin decline to 20.5% from 21.9% reflects a shift toward lower-margin categories. If that pattern continues, it could limit earnings expansion even with higher revenue. The non-GAAP operating margin stayed flat at 9.2%, indicating cost discipline is holding, though ongoing pressure from performance incentives and workplace costs deserves attention.
Other items include the path of interest expense and the tax rate. Balance-sheet flexibility looks adequate, with net leverage near 2.5 times and roughly $3.4 billion in combined liquidity, leaving room for shareholder returns and investments. Working-capital efficiency and free-cash-flow generation also remain areas of interest after showing some improvement from the prior-year quarter.
Checking the Broader Picture with Tickeron Tools
I also checked this using Tickeron’s AI Screener to see how CDW compares with peers in the technology distribution space and to spot any related patterns across the sector.
Disclaimer
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
CDW sees MACD Histogram crosses below signal line
CDW saw its Moving Average Convergence Divergence Histogram (MACD) turn negative on November 02, 2026. This is a bearish signal that suggests the stock could decline going forward. Tickeron's A.I.dvisor looked at 46 instances where the indicator turned negative. In 33 of the 46 cases the stock moved lower in the days that followed. This puts the odds of a downward move at 72%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for CDW moved out of overbought territory on October 30, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 36 similar instances where the indicator moved out of overbought territory. In 20 of the 36 cases, the stock moved lower in the following days. This puts the odds of a move lower at 56%.
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In 38 of 54 cases where CDW's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are 70%.
The Momentum Indicator moved below the 0 level on November 02, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on CDW as a result. In 59 of 85 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 69%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where CDW declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 64%.
CDW broke above its upper Bollinger Band on October 13, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
CDW moved above its 50-day moving average on October 09, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for CDW crossed bullishly above the 50-day moving average on October 15, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 11 of 16 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 69%.
Following a +2.35% 3-day Advance, the price is estimated to grow further. Considering data from situations where CDW advanced for three days, in 189 of 319 cases, the price rose further within the following month. The odds of a continued upward trend are 59%.
The Aroon Indicator entered an Uptrend today. In 141 of 229 cases where CDW Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 62%.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 24 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 41 (best 1 - 100 worst), indicating steady price growth. CDW’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is 56 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of 71 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (7.667) is normal, around the industry mean (2.796). P/E Ratio (17.937) is within average values for comparable stocks, (18.242). Projected Growth (PEG Ratio) (0.960) is also within normal values, averaging (2.284). Dividend Yield (0.017) settles around the average of (0.207) among similar stocks. P/S Ratio (0.829) is also within normal values, averaging (139.965).
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. CDW’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 93, placing this stock worse than average.
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General Information
a provider of information technology solutions
Industry InformationTechnologyServices
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