We expect CDW Corporation CDW to beat expectations when it reports third-quarter 2015 results on Nov 4.
Why a Likely Positive Surprise?
Our proven model shows that CDW is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate (78 cents) and the Zacks Consensus Estimate (76 cents), stands at +2.63%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank #2 (Buy): Note that stocks with Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of CDW’s Zacks Rank #2 and +2.63% ESP makes us very confident in looking for a positive surprise.
What is Driving the Better-Than-Expected Earnings?
The company’s enriched product portfolio and product refreshes continue to drive growth. The company’s significant exposure to high-end corporate desktop and digital education implementation also remains a positive.
We believe that the company’s strong position at medium to large businesses, focus on small & medium businesses and customer additions to increase market share are encouraging. The company’s effort to pay off debt is a positive.
Moreover, it is noteworthy that CDW has surpassed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 8%.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Facebook, Inc. FB, with Earnings ESP of +5.71% and a Zacks Rank #1 (Strong Buy)
CyberArk Software, Ltd. CYBR, with an Earnings ESP of +10.00% and a Zacks Rank #2
CenturyLink, Inc. CTL, with an Earnings ESP of +1.45% and a Zacks Rank #2
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