CDW

CDW reported solid Q2 2026 results with 10% YoY sales growth but faced 70 bps gross margin decline due to higher-mix hardware infrastructure and enterprise orders. The company expects operating leverage improvements in H2 2026 through efficiency initiatives. Competitors ServiceNow, Accenture, and Avnet also face margin pressures from AI adoption and infrastructure costs, though some show stabilization efforts.

CDW returned $706 million to shareholders in H1 2026, including $545 million in buybacks, with net leverage at 2.5X and over $1.1 billion in remaining buyback capacity. However, adjusted free cash flow conversion remained below management's 80-90% target at 42% of non-GAAP net income, primarily due to working capital timing and inventory buildup. Management expects inventory rationalization to drive improved cash flow in H2 2026.

CDW Inc. is drawing attention from options traders due to unusually high implied volatility on October 16, 2026 $175 put options, suggesting market expectations of significant price movement. Despite this options market activity, CDW maintains a Zacks Rank #3 (Hold) rating with modest analyst estimate revisions over the past 60 days, with consensus estimates moving slightly from $2.91 to $2.92 per share.