CDW beats Q4 earnings forecasts, reaffirms 2026 growth target
Technology solutions provider delivers $5.5B revenue and raises dividend as shares trade near 52-week lows
CDW Corporation reported stronger-than-expected fourth quarter earnings on Wednesday, with the technology solutions provider beating analyst estimates on both revenue and profit while reaffirming its ambitious growth targets for 2026.
The company posted net sales of $5.51 billion for the quarter ending December 2025, a 6.3% increase from the prior year and above the consensus analyst forecast of approximately $5.33 billion. Non-GAAP diluted earnings per share reached $2.57, surpassing analyst projections that ranged from $2.31 to $2.44.
"We delivered a strong finish to a dynamic year, driving value and mission critical outcomes for customers across the full IT stack and lifecycle," said Christine A. Leahy, CDW's chair and chief executive officer. She highlighted the company's position as a "trusted advisor" and pointed to "the resilience of our diversified customer base and the depth of our product and solutions portfolio."
Despite the earnings beat, CDW's shares have struggled in recent months, currently trading at $126.16, just above their 52-week low of $123.08 and far below the year's high of $219.61. The stock has declined more than 40% from its February 2025 peak, reflecting broader investor concerns about IT spending patterns and economic uncertainty.
The company's profitability metrics showed improvement, with gross margins expanding to 22.8% from 22.3% in the prior year. GAAP diluted earnings per share increased 8.8% to $2.14, compared with $1.97 in the fourth quarter of 2024. Non-GAAP EPS rose 3.8% year-over-year to $2.57 from $2.48.
Looking ahead, CDW reaffirmed its guidance to exceed US IT addressable market growth by 200 to 300 basis points in 2026. This target, consistent with the company's previous strategic outlook, assumes that corporate IT budgets will continue to expand as organizations invest in digital transformation initiatives.
The board of directors also declared a quarterly cash dividend of $0.63 per share, payable March 10 to shareholders of record as of February 25. The annualized dividend of $2.52 represents a yield of approximately 2% at the current share price.
Analysts maintain a cautiously optimistic view on the stock. Of the 11 analysts covering CDW, six rate it a buy while five recommend hold, with a median price target of $173.80 according to market data, implying significant upside from current levels. The company trades at 15.8 times trailing earnings and 11.9 times forward earnings, reflecting investor skepticism about its growth prospects.
CDW, based in Vernon Hills, Illinois, provides hardware, software, and integrated technology services to businesses, government entities, and educational institutions. The company's diversified customer base and broad product portfolio have historically provided stability during economic cycles, though the current environment has proven challenging even for established IT distributors.
The earnings report comes at a critical juncture for the IT services sector, as companies navigate shifting technology priorities and cautious corporate spending. CDW's ability to outpace broader IT market growth by 200 to 300 basis points will depend on its execution in key areas including cloud services, cybersecurity solutions, and hybrid infrastructure deployments.
Investors will be watching closely for signs that the company can maintain its market share gains while sustaining margin improvement. The next significant catalyst for CDW is likely to be its first quarter 2026 earnings report, which should provide early evidence of whether the company is on track to meet its growth outperformance targets.