CDW Corporation: Operating Leverage Fading As The Sales Shift

CDW Corporation delivered 9.9% YoY top-line growth, but margin compression and operating leverage erosion muted the positive impact. EPS rose 4.8%, primarily driven by aggressive buybacks reducing share count by 3.5% YoY, not by core operating improvements. COGS outpaced revenue growth, with hardware sales up 10% YoY but service revenues stagnating, deepening margin pressure. I rate CDW a Hold, given persistent margin erosion, slowing revenue growth, and reliance on buybacks to support EPS.

The market reaction after CDW Corporation (CDW) reported earnings this week, I think, was somewhat muted. When looking at the numbers, I think the reaction was very logical. The company managed to grow the top-line at