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CDW (CDW) is a Zacks Rank #5 (Strong Sell) has seen earnings estimates slide lower in a big way recently.  This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.

Description

Headquartered in Vernon Hills, IL, CDW Corporation, founded in 1984, is a leading provider of integrated information technology (IT) solutions to small, medium and large business, government, education and healthcare customers in the United States, United Kingdom and Canada.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of CDW, I see four straight beats and of the Zacks Consensus Estimate.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For CDW I see annual estimates moving lower of late.

The current fiscal year consensus number moved lower from $10.34 to $9.85 over the last 7 days. 

The next year has moved from $11.34 to $10.89.  over the last 60 days.

That move lower is probably the biggest deciding factor for this stock to be a Zacks Rank #5 (Strong Sell).

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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