CDW Corporation

This is our first report on CDW Corporation, a leading IT solutions provider to companies across the U.S., Canada, and U.K. The second quarterly result was strictly mediocre for CDW as the company failed to meet Wall Street expectations on the revenue front but managed an earnings beat. CDW continued to operate effectively despite a difficult supply environment, resulting in improving sales, margins, and profitability. With a continued emphasis on hybrid work and the return to the office driving collaboration, networking, and endpoint solutions, digital transformation, agility, and security remain major considerations. Moreover, strong double-digit growth in NetComm, servers, collaboration, cloud, and software drove great solutions growth due to digital transformation. The management also produced another quarter of double-digit client device growth, reflecting both unit and ASP gains, as corporate customers continued to rely on them to satisfy their demands for hybrid and return-to-office solutions. As clients modernized, enhanced, and secured the apps running on their endpoint devices throughout the quarter, customer spending on security and cloud services climbed by more than 20%. The demand for infrastructure is the logical outcome of distant enabling and return to office demand. We initiate coverage on the stock of CDW with a ‘Buy’ rating.