The Best And Worst Channel Company Stocks In Q1 2015

Channel Stocks: Gainers Lead Losers 2 To 1 In Q1 2015

In 2014 the ratio of channel company stock gainers to losers was about 2 to 1 and that trend continued into the first quarter of 2015. Of the 25 publicly traded solution providers and distributors on our watch list, 17 recorded share price gains in the quarter ended March 31 while 8 saw their share prices decline.

How does that compare to the stock market overall? In the quarter the Dow Jones Index was down 0.26 percent while the Nasdaq was up nearly 3.5 percent.

Here's a look at which companies' stock did well in Q1 and which ones did not.

Cognizant Technology Solutions

CEO: Francisco D'Souza

Dec. 31, 2014: $52.66

March 31, 2015: $62.39

Change: +18.48%

Cognizant got some unwelcome news in early January when it was sued by a unit of Syntel for more than $6 billion after Cognizant acquired TriZetto in late 2014. The suit alleges that the acquisition terminated a contract Syntel had with TriZetto. There were also allegations of mishandled confidential data.

But shareholders were obviously more focused on Cognizant's financial performance, judging by the increase in the company's share price.

Cognizant, No. 10 on the 2014 CRN Solution Provider 500 list, reported in January that sales in its fourth quarter ended Dec. 31 grew more than 16 percent to $2.74 billion.

Ciber

CEO: Michael Boustridge

Dec. 31, 2014: $3.55

March 31, 2015: $4.12

Change: +16.06%

Ciber spent most of 2014 working through a restructuring, layoffs and bad quarters. So it was welcome news in February when the company reported its most profitable quarter in years, thanks to the company's cross-selling efforts, application modernization services and off-shoring strategy.

In February Ciber, No. 38 on the 2014 CRN Solution Provider 500 list, reported that revenue in its fourth quarter ended Dec. 31 was down just over 1 percent to $219.6 million. But net income soared to $2.8 million compared to $102,000 in the same period one year earlier.

For all of 2014 Ciber reported revenue of $863.6 million, down 1.5 percent from $877.3 million in 2013. Despite the profitable fourth quarter, Ciber reported a $19.6 million loss for the year compared to a $14.5 million loss in 2013.

Syntel

CEO: Nitin Rakesh

Dec. 31, 2014: $44.98

March 31, 2015: $51.73

Change: +15.00%

Syntel's stock declined 50.54 percent in 2014, meaning it lost a little more than half of its total value. So investors were undoubtedly happy to see the company's shares rebound in the first quarter of 2015.

In February Syntel, No. 40 on the 2014 CRN Solution Provider 500 list, reported that sales in its fourth quarter ended Dec. 31 grew 5 percent to $235.3 million while net income increased nearly 7 percent to $70.7 million.

For all of 2014 revenue grew nearly 11 percent to $911.4 million while net income increased almost 14 percent to $249.7 million.

ePlus Technology

CEO: Phillip Norton

Dec. 31, 2014: $75.69

March 31, 2015: $86.93

Change: +14.85%

IT consulting firm ePlus Technology, No. 36 on the 2014 CRN Solution Provider 500, reported in February that sales in its fiscal third quarter ended Dec. 31 grew nearly 15 percent to $306.2 million. Net earnings soared 46 percent to $15.5 million.

ManTech International

CEO: George Pedersen

Dec. 31, 2014: $30.23

March 31, 2015: $33.94

Change: +12.27%

In March ManTech, No. 21 on the CRN 2014 Solution Provider 500 list, was awarded a $10.9 million contract to provide IT services to the U.S. Department of Defense's health data exchange initiatives.

In February ManTech said revenue in its fourth quarter ended Dec. 31 declined 16 percent year over year to $411.4 million. But the company reversed the $65.6 million loss of one year before into a profit of $14.5 million.

ManTech reported a year-over-year 23 percent revenue decline to $1.77 billion for all of 2014. But on the bottom line the company reported net income of $47.3 million in contrast to a loss of $6.1 million in 2013.

CGI Group

CEO: Michael Roach

Dec. 31, 2014: $38.16

March 31, 2015: $42.45

Change: +11.24%

For its fiscal first quarter ended Dec. 31, CGI Group reported sales of CA$2.54 billion (U.S. $2.08 billion), down nearly 4 percent from the same period one year earlier. But the company's earnings increased nearly 25 percent year over year to CA$236.3 million (U.S. $193.2 million).

CGI Group is No. 9 on the 2014 CRN Solution Provider 500.

Perficient

CEO: Jeffrey Davis

Dec. 31, 2014: $18.63

March 31, 2015: $20.69

Change: +11.06%

In January Perficient, No. 66 on the 2014 CRN Solution Provider 500, completed its acquisition of the assets of Zeon Solutions, an IT services and consulting firm specializing in developing, implementing and supporting ecommerce systems. The acquisition, the latest in a string of acquisitions by Perficient over the past several years, was announced in December.

In early March the solution provider reported that sales in its fourth quarter ended Dec. 31 increased 29 percent to $125.8 million while net income grew more than 16 percent to $6.4 million. For all of 2014 sales surged more than 22 percent to $456.7 million while net income for the year grew 8 percent to $23.2 million.

Insight Enterprises

CEO: Kenneth Lamneck

Dec. 31, 2014: $25.89

March 31, 2015: $28.52

Change: +10.16%

Insight Enterprises, No. 14 on the 2014 CRN Solution Provider 500, continues to be impacted by changes Microsoft made to its partner compensation model last year. In February the company said it expected the changes to result in a multimillion-dollar earnings hit in 2015.

In February Insight Enterprises reported that in its fourth quarter ended Dec. 31 sales increased 4 percent to $1.45 billion, but net earnings declined 5 percent to $19.5 million. Sales for all of 2014 increased 3 percent to $5.32 billion and net earnings grew 7 percent to $75.7 million.

SS&C Technologies

CEO: William Stone

Dec. 31, 2014: $58.49

March 31, 2015: $62.30

Change: +6.51%

In February SS&C Technologies, No. 41 on the 2014 CRN Solution Provider 500, unveiled a deal to acquire Advent Software, a provider of software and services for the global investment industry, for $2.7 billion.

Also in February SS&C reported its fourth-quarter and full-year financial results for the period ended Dec. 31. SS&C's revenue in the quarter grew 10 percent to $200.7 million while net income increased more than 36 percent to $36.6 million.

For all of 2014 the solution provider reported revenue of $767.9 million, up nearly 8 percent from 2013, while net income increased 11 percent to $131.1 million.

PC Connection

CEO: Timothy McGrath

Dec. 31, 2014: $24.55

March 31, 2015: $26.09

Change: +6.27%

PC Connection, No. 24 on the 2014 CRN Solution Provider 500, reported in January that sales in its fourth quarter ended Dec. 31 increased 9 percent to $630.8 million while net income grew more than 21 percent to $11.9 million.

For all of 2014 PC Connections' sales were up nearly 11 percent to $2.46 billion while net income grew just shy of 20 percent to $42.7 million.

CDW

CEO: Thomas Richards

Dec. 31, 2014: $35.17

March 31, 2015: $37.24

Change: +5.89%

In February CDW, No. 8 on the 2014 CRN Solution Provider 500, reported solid growth in both its fourth quarter and fiscal 2014.

For the quarter ended Dec. 31 CDW reported sales of $3.05 billion, up more than 12 percent from the same period in 2013. Net income for the quarter, however, was down nearly 14 percent year over year to $51.8 million.

For all of fiscal 2014 CDW's sales were up just over 12 percent to $12.07 billion while net income surged more than 84 percent to $244.9 million.

Arrow Electronics

CEO: Michael Long

Dec. 31, 2014: $57.89

March 31, 2015: $61.15

Change: +5.63%

In March distributor Arrow Electronics struck a deal to acquire immixGroup, a fast-growing Washington D.C.-area value-added distributor and solution provider, to expand Arrow's position in the federal government IT market.

In February Arrow reported that sales in its fourth quarter ended Dec. 31 increased nearly 4 percent to $6.40 billion, but net income dropped nearly 14 percent to $116.2 million. For all of 2014 sales were up nearly 7 percent to $22.77 billion and net income soared nearly 25 percent to $498.0 million.

Accenture

CEO: Pierre Nanterme

Dec. 31, 2014: $89.31

March 31, 2015: $93.69

Change: +4.90%

Accenture started off the year by striking a deal to acquire Houston-based Structure, a 190-person consulting and systems integration firm, in a move that strengthens Accenture's position in the energy and utility verticals.

In March Accenture, No. 3 on the 2014 CRN Solution Provider 500 list, reported that revenue in its fiscal second quarter ended Feb. 28 was up almost 5 percent to $7.93 billion. Net income for the quarter was up nearly 3 percent to $743.2 million.

CACI International

CEO: Kenneth Asbury

Dec. 31, 2014: $86.18

March 31, 2015: $89.92

Change: +4.34%

In January CACI reported that revenue in its fiscal second quarter ended Dec. 31 dropped 8.8 percent year over year to $815.4 million. Net income for the quarter was down 29.5 percent to $24.6 million.

CACI's primary business is serving the federal government and in March the company was awarded a $43 million contract to provide engineering support services, including modeling and simulation of sensor and imaging systems, to the U.S. Army.

CACI was No. 16 on the 2014 CRN Solution Provider 500.

Computer Sciences Corp.

CEO: Mike Lawrie

Dec. 31, 2014: $63.05

March 31, 2015: $65.28

Change: +3.54%

CSC, No. 4 on the 2014 CRN Solution Provider 500, has been navigating a multiyear transformation, overhauling its business model and positioning itself to take advantage of industry trends such as cloud computing and big data.

In February CSC reported that revenue in its fiscal third quarter ended Jan. 2 was down 8.7 percent year over year to $2.95 billion. The company also recorded a loss of $314 million compared to earnings of $271 million in the same quarter one year earlier.

Avnet

CEO: Rick Hamada

Dec. 31, 2014: $43.02

March 31, 2015: $44.50

Change: +3.44%

In January distributor Avnet reported that sales in its fiscal second quarter ended Dec. 27 increased 1.8 percent to $7.55 billion. Net income was up 31.1 percent to $163.7 million.

But global sales from Avnet's Technology Solution division fell 2 percent in the quarter to $3.12 billion.

ScanSource

CEO: Mike Baur

Dec. 31, 2014: $40.16

March 31, 2015: $40.65

Change: +1.22%

In March ScanSource Communications, a unit of distributor ScanSource, said that it had expanded its product portfolio with the cloud-based ShoreTel Sky hosted VoIP system.

In January ScanSource reported that it achieved record sales in its fiscal second quarter ended Dec. 31. Sales for the quarter were up 9 percent year over year to $807.0 million. But net income for the quarter dropped more than 8 percent to $16.8 million.

Synnex

CEO: Kevin Murai

Dec. 31, 2014: $78.16

March 31, 2015: $77.25

Change: -1.16%

Synnex is the first company in our channel company index whose stock declined in value during the first quarter.

For its fiscal first quarter ended Feb. 28 distributor Synnex reported that revenue grew 5.8 percent year over year to $3.20 billion while net income was up 20.6 percent to $46.3 million.

As good as those numbers appeared, the company missed sales and profit expectations because of weak demand in the consumer market and delays for a major Concentrix division contract, according to the company.

PCM

CEO: Frank Khulusi

Dec. 31, 2014: $9.52

March 31, 2015: $9.34

Change: -1.89%

On March 16 PCM, No. 27 on the 2014 CRN Solution Provider 500, revealed a deal to acquire the assets of En Pointe Technologies for $15 million and the acquisition was completed April 1. En Pointe was No. 42 on the 2014 CRN Solution Provider 500.

In February PCM reported that sales in its fourth quarter ended Dec. 31 grew less than 1 percent year over year to $359.2 million while net income for the quarter was down 13 percent to $1.6 million.

For all of 2014 sales dropped a fraction of 1 percent to $1.36 billion while net income tumbled almost 33 percent to $5.5 million.

Datalink

CEO: Paul Lidsky

Dec. 31, 2014: $12.90

March 31, 2015: $12.04

Change: -6.66%

In February Datalink reported that sales in its fourth quarter ended Dec. 31 increased 7.5 percent year-over-year to $186.4 million. But net earnings for the quarter were down nearly 3 percent to $3.7 million.

The figures included results from Bear Data Solutions, which Datalink acquired in October. While Bear Data added less revenue than expected to Datalink's top-line revenue, company executives were bullish on the acquisition's eventual impact on the company's sales growth.

For all of 2014 Datalink reported sales of $630.2 million, up 6 percent from 2013. Net earnings likewise grew more than 10 percent to $11.1 million.

Tech Data

CEO: Robert Dutkowsky

Dec. 31, 2014: $63.23

March 31, 2015: $57.77

Change: -8.63%

Tech Data in March reported disappointing financial results for its fourth quarter ended Jan. 31, including an 8 percent sales decline to $7.33 billion that missed Wall Street analysts' forecasts by $330 million. Net income for the quarter was down 26.5 percent to $80.7 million.

For all of fiscal 2015 sales grew 3 percent to $27.67 billion, but net income for the year dropped nearly 5 percent to $175.2 million.

Ingram Micro

CEO: Alain Monie

Dec. 31, 2014: $27.64

March 31, 2015: $25.12

Change: -9.12%

In January storage technology giant EMC surprised the industry when it said it would discontinue its distribution relationship with Ingram Micro -- despite recognizing Ingram Micro as its distributor of the year just seven months earlier.

For its fiscal fourth quarter ended Jan. 3 Ingram Micro reported sales of just less than $14.0 billion, up 18 percent from the same quarter one year earlier. Net income for the quarter was up 6 percent to $119 million.

For the entire year sales grew 9 percent to $46.49 billion, but net income plunged 14 percent to $267 million.

Systemax

CEO: Richard Leeds

Dec. 31, 2014: $13.50

March 31, 2015: $12.22

Change: -9.48%

In March Systemax, No. 19 on the 2014 CRN Solution Provider 500, revealed a major restructuring that would cut costs and shutter the company's retail business. That news followed the announcement of the company's year-end earnings that included a multimillion-dollar loss.

For the fourth ended Dec. 31 Systemax reported sales of $912.9 million, up nearly 39 percent from the same period one year earlier. But the company's loss increased to $25.5 million from $19.8 million one year before.

For all of fiscal 2014 the company's sales increased 2.7 percent to $3.44 billion while its loss narrowed to $37.5 million from the $43.8 million loss recorded in 2013.

Black Box Network Services

CEO: Mike McAndrew

Dec. 31, 2014: $23.90

March 31, 2015: $20.93

Change: -12.43%

In January Black Box reported that revenue in its fiscal third quarter ended Dec. 27 increased 6 percent year-over-year to $253.3 million. But net income for the quarter tumbled 21 percent to $5.3 million.

Black Box, No. 35 on the 2014 CRN Solution Provider 500, will report its fiscal fourth quarter and fiscal 2015 results on May 7.

Unisys

CEO: Peter Altabef

Dec. 31, 2014: $29.48

March 31, 2015: $23.21

Change: -21.27%

In December Unisys named Peter Altabef, a 20-year channel veteran, as the company's new president and CEO. In January Altabef said Unisys would focus on deepening its domain-specific expertise and develop software to differentiate its services business.

In January Unisys, No. 17 on the 2014 CRN Solution Provider 500, reported that revenue in its fourth quarter ended Dec. 31 declined 9 percent year over year to $905.8 million while net income dropped more than 47 percent to $61.8 million. For all of 2014 revenue was down nearly 3 percent to $3.36 billion while net income plunged more than 52 percent to $44.0 million.

Last week Unisys unveiled a $300 million restructuring plan that includes layoffs of 8 percent of the company's workforce. That news came after the period covered in this stock price analysis.