The Best And Worst Channel Company Stocks In Q3 2015

Channel Stocks: A Downer Of A Quarter

In 2014 the ratio of channel company stock gainers to losers was about 2 to 1. But in this year's third quarter that reversed with only nine of the 25 publicly traded solution providers and distributors on our watch list recording share price gains. The other 16 saw the price of their stock fall, a few declining by significant double digits.

How does that compare to the stock market overall? In the third quarter the Dow Jones Index was down 7.58 percent while the Nasdaq was down 7.35 percent.

Here's a look at which solution providers' stock did well in the third quarter of 2015 and which ones did not, based on stock closing prices on June 30 and Sept. 30.

CDW

CEO: Thomas Richards

June 30, 2015: $34.28

Sept. 30, 2015: $40.86

Change: +19.19%

CDW, No. 6 on the CRN Solution Provider 500, recorded the biggest share price gain among the 25 companies in our index.

For the third quarter ended Sept. 30, CDW reported sales of $3.50 billion, up 7.2 percent year over year from $3.27 billion. Net income was $150.9 million, up more than 171 percent from $55.6 million one year earlier.

Tech Data

CEO: Robert Dutkowsky

June 30, 2015: $57.56

Sept. 30, 2015: $68.50

Change: +19.00%

In August distributor Tech Data saw the price of its stock skyrocket when it reported the financial results of its second fiscal quarter ended July 31.

The company reported that sales actually declined nearly 4 percent in the quarter to $6.58 billion from $6.84 billion in the same period one year earlier. The company attributed that drop to the impact of weaker foreign currencies against the U.S. dollar and that sales were up 8 percent when adjusted for currency fluctuations.

Net income for the quarter almost doubled to $76.4 million from $39.3 million one year earlier.

Synnex

CEO: Kevin Murai

June 30, 2015: $73.19

Sept. 30, 2015: $85.06

Change: +16.22%

Synnex recorded a solid gain in the price of its stock in the third quarter despite the distributor's less-than-stellar recent financial performance.

On Sept. 28 Synnex reported that for its fiscal third quarter ended Aug. 31, sales were $3.33 billion, down 5.7 percent from $3.54 billion in the same quarter one year earlier. Net income rose 7.1 percent, however, to $48.2 million from $45.0 million one year before.

SS&C Technologies

CEO: William Stone

June 30, 2015: $62.50

Sept. 30, 2015: $70.04

Change: +12.06%

SS&C, No. 38 on the CRN Solution Provider 500, has been on an acquisition spree in the past year. On July 8 it completed its acquisition of Advent Software, a provider of software and services for the global investment management industry, for $2.63 billion. On Sept. 2 SS&C announced that it had acquired Varden Technologies, a developer of client and adviser communication solutions for investment firms. Six days later it bought Primatics Financial, a provider of financial services software and software-enabled services, for approximately $122 million.

For the third quarter ended Sept. 30 SS&C reported sales of $280.9 million, up 45 percent from $192.6 million one year earlier. But the solution provider's adjusted sales, including acquisitions, were up nearly 62 percent to $311.4 million.

Ingram Micro

CEO: Alain Monie

June 30, 2015: $25.03

Sept. 30, 2015: $27.24

Change: +8.83%

In July distributor Ingram Micro, in reporting its second-quarter results, announced that it would slash up to 540 jobs as part of a $100 million cost-cutting program.

For its third quarter ended Oct. 3 Ingram Micro reported sales of $10.52 billion, down more than 6 percent from $11.24 billion in the same quarter one year before. Net income was $65 million, down almost 10 percent year over year from $72 million.

Avnet

CEO: Rick Hamada

June 30, 2015: $41.11

Sept. 30, 2015: $42.68

Change: +3.82%

On Aug. 14 Avnet announced a 6.25 percent dividend increase and a $250 million expansion of its share repurchase program.

For its first fiscal quarter ended Oct. 3 distributor Avnet reported sales of $6.97 billion, up nearly 2 percent from the same period one year earlier. Net income of $130.3 million for the period was also up nearly 2 percent year over year from $127.9 million.

ePlus Technology

CEO: Phillip Norton

June 30, 2015: $76.65

Sept. 30, 2015: $79.07

Change: +3.16%

On Aug. 19 ePlus Technology, No. 32 on the CRN Solution Provider 500, announced a plan to repurchase up to 500,000 shares of outstanding common stock over a 12-month period. As of July 31 the company had 7.5 million outstanding shares.

For its second fiscal quarter ended Sept. 30 ePlus reported sales of $336.3 million, up 13 percent from $297.5 million one year earlier. Earnings were $15.7 million, up 31 percent from $12.0 million one year before.

Cognizant Technology Solutions

CEO: Francisco D'Souza

June 30, 2015: $61.09

Sept. 30, 2015: $62.61

Change: +2.49%

In September Cognizant, No. 8 on the CRN Solution Provider 500, struck an alliance with telecommunications giant Verizon to help enterprise clients create connected, high-performance systems that focus on digital transformation, systems integration and the Internet of Things.

For its third quarter ended Sept. 30 Cognizant reported revenue of $3.19 billion, up more than 23 percent year over year from $2.58 billion. Net income was up nearly 12 percent to $397.2 million from $355.6 million one year before.

Accenture

CEO: Pierre Nanterme

June 30, 2015: $96.78

Sept. 30, 2015: $98.26

Change: +1.53%

Systems integrator Accenture, No. 2 on the CRN Solution Provider 500, has been busy on the acquisition front. In September the company announced a deal to acquire Cloud Sherpas, one of the fastest-growing cloud solution providers in the world.

In August Accenture stepped up its vertical industry consulting game with two acquisitions: Schlumberger Business Consulting in the oil and gas management industry and Total Logistics in retail supply chain management. Also in August the company bought FusionX, a cybersecurity company focused on attack simulation and threat modeling.

Arrow Electronics

CEO: Michael Long

June 30, 2015: $55.80

Sept. 30, 2015: $55.28

Change: -0.93%

Arrow Electronics is the first company on our index to record a drop in its stock price for the third quarter. The distributor has been shifting its focus away from hardware in favor of infrastructure software, security and data analytics applications. While the goal is to boost profit margins, the shift in product mix has led to a drag on sales.

For its third quarter ended Sept. 26 Arrow reported sales of $5.70 billion, up 1.5 percent year over year from $5.61 billion. But net income fell more than 25 percent to $109.2 million from $146.9 million one year earlier.

Syntel

CEO: Nitin Rakesh

June 30, 2015: $47.48

Sept. 30, 2015: $45.31

Change: -4.57%

On Sept. 23 Syntel executives rang the Nasdaq stock market closing bell to celebrate the company's 35 years in business.

For its third quarter ended Sept. 30 Syntel, No. 36 on the CRN Solution Provider 500, reported revenue of $253.6 million, up 11 percent from $228.3 million in the same quarter one year earlier. Net income for the third quarter was $77.7 million, up 26 percent from $61.6 million one year before.

Computer Sciences Corp.

CEO: Mike Lawrie

June 30, 2015: $65.64

Sept. 30, 2015: $61.38

Change: -6.49%

Computer Sciences Corp. spent the third quarter preparing for its split into two publicly traded companies, one focused on its $8.1 billion commercial business and the other, to be called CSRA, on its $4.1 billion U.S. government services. The company, No. 5 on the CRN Solution Provider 500, expects to complete the split this month.

For its second fiscal quarter ended Oct. 2, CSC reported revenue of $2.71 billion, down nearly 12 percent from $3.08 billion in last year's second quarter. Net income was up more than 10 percent, however, to $167 million from $151 million one year ago.

ScanSource

CEO: Mike Baur

June 30, 2015: $38.06

Sept. 30, 2015: $35.46

Change: -6.83%

ScanSource struck a deal on Aug. 18 to acquire KBZ, a distributor of Cisco videoconferencing equipment, in a move that extends the distributor's Cisco business. The acquisition was completed Sept. 8.

For its first fiscal quarter ended Sept. 30, ScanSource reported sales of $870.8 million, up 10 percent from $791.7 million in sales in the same quarter one year earlier. But net income was down 17 percent to $16.0 million from $19.2 million one year before.

CGI Group

CEO: Michael Roach

June 30, 2015: $39.08

Sept. 30, 2015: $36.21

Change: -7.34%

For its fourth fiscal quarter ended Sept. 30, Montreal-based CGI reported revenue of Canadian $2.59 billion (about U.S. $1.94 billion), up 4 percent from Canadian $2.48 billion (about U.S. $1.87 billion) in the same quarter one year before. Net earnings for the quarter were Canadian $977.6 million (about U.S. $734.4 million), up nearly 14 percent from Canadian $859.4 million (about U.S. $645.7 million) one year earlier.

CGI is No. 15 on the CRN Solution Provider 500.

Ciber

CEO: Michael Boustridge

June 30, 2015: $3.45

Sept. 30, 2015: $3.18

Change: -7.83%

For the third quarter ended Sept. 30, Ciber reported revenue of $180.5 million, down almost 10 percent year over year from $200.3 million. The company reported a $356,000 loss for the quarter compared to a $20.8 million quarterly loss one year earlier.

Ciber is No. 37 on the CRN Solution Provider 500.

CACI International

CEO: Kenneth Asbury

June 30, 2015: $80.89

Sept. 30, 2015: $73.97

Change: -8.55%

CACI, a leading provider of IT solutions to U.S. defense, intelligence and civilian government agencies, said on Sept. 22 that it had been awarded a five-year contract worth up to $102 million to provide litigation support services and electronic discovery for the U.S. Securities and Exchange Commission.

For its first fiscal quarter ended Sept. 30, CACI reported revenue of $822.4 million, up nearly 1 percent from $814.7 million in the same quarter one year earlier. Net income rose more than 8 percent year over year to $33.8 million from $31.1 million.

CACI is No. 16 on the CRN Solution Provider 500.

PCM

CEO: Frank Khulusi

June 30, 2015: $10.03

Sept. 30, 2015: $9.04

Change: -9.87%

In July PCM reorganized into three new operations: the Advanced Technologies Group, the Endpoint Technologies Group and the Managed Technology Group. Company executives said the reorganization plan would transform the company into a "solutions and services powerhouse."

PCM was No. 29 on the 2015 CRN Solution Provider 500. But the company has made a number of acquisitions this year, both prior to and after the third-quarter period covered here, that are sure to boost its ranking in 2016.

PCM reported sales of $404.9 million for its third quarter ended Sept. 30, up 20 percent year over year from $336.8 million. But the company reported a $785,000 loss for the quarter compared to a $141,000 loss one year earlier.

ManTech International

CEO: George Pedersen

June 30, 2015: $29.00

Sept. 30, 2015: $25.70

Change: -11.38%

ManTech International reported revenue of $393.0 million for its third quarter ended Sept. 30, down 12 percent year-over-year from $447.2 million. Net income was down almost 16 percent to $13.0 million from $15.5 million one year before.

But ManTech, No. 24 on the CRN Solution Provider 500, expected sales growth from a jump in federal government contracts. On July 30, for example, the company was awarded a $278.5 million task order to provide IT modernization and logistics management services for the Defense Intelligence Agency.

Systemax

CEO: Richard Leeds

June 30, 2015: $8.64

Sept. 30, 2015: $7.49

Change: -13.31%

Systemax, No. 17 on the CRN Solution Provider 500, has been struggling to restructure its business to cut costs and reverse its declining sales.

Systemax reported sales of $699.3 million for its third quarter ended Sept. 30, down more than 15 percent year over year from $825.4 million. The solution provider's loss widened to $10.3 from $2.8 million one year earlier.

In November the company announced the sale to PCM of certain B2B assets of its North American Technology Group, including its TigerDirect brand. That was after the third-quarter period covered by this stock price analysis.

Insight Enterprises

CEO: Kenneth Lamneck

June 30, 2015: $29.91

Sept. 30, 2015: $25.85

Change: -13.57%

In August Microsoft named Insight Public Sector, a division of Insight Enterprises, the vendor's federal channel partner of the year, providing cloud, mobility and other solutions to U.S. federal government agencies.

Insight Enterprises, No. 13 on the CRN Solution Provider 500, reported sales of $1.34 billion for its third quarter ended Sept. 30, up 8 percent year over year from $1.24 billion. Net earnings were up 20 percent to $20.8 million from $17.4 million one year earlier.

PC Connection

CEO: Timothy McGrath

June 30, 2015: $24.74

Sept. 30, 2015: $20.73

Change: -16.21%

PC Connection reported sales of $680.8 million for its third quarter ended Sept. 30, up more than 6 percent year over year from $639.6 million. PC Connection, No. 20 on the CRN Solution Provider 500, said it was the best quarter in the company's history. Net income was up nearly 2 percent to $13.0 million from $12.2 million one year earlier.

Perficient

CEO: Jeffrey Davis

June 30, 2015: $19.24

Sept. 30, 2015: $15.43

Change: -19.80%

On Sept. 18, Perficient acquired Chattanooga-based Market Street Solutions, a provider of big data software and services in the IBM market, for $5.3 million. Perficient, No. 56 on the CRN Solution Provider 500, has made a number of acquisitions in recent years around certain vendors like IBM, Oracle and Salesforce.com, and in specific vertical industries such as life sciences and financial services.

Perficient reported sales of $120.9 million for its third quarter ended Sept. 30, up 3 percent year over year from $117.0 million. Net income was $7.4 million, up 1 percent from one year before.

Black Box Network Services

CEO: Mike McAndrew

June 30, 2015: $20.00

Sept. 30, 2015: $14.74

Change: -26.30%

Black Box reported revenue of $236.8 million for its fiscal second quarter ended Sept. 26, up more than 3 percent year over year from $229.2 million. Black Box, No. 34 on the CRN Solution Provider 500, reported a $129.8 million loss for the quarter compared to net income of $3.2 million one year earlier.

Datalink

CEO: Paul Lidsky

June 30, 2015: $8.94

Sept. 30, 2015: $5.97

Change: -33.22%

Datalink has been expanding into IT consulting and professional services in the past year. In July the company, No. 43 on the CRN Solution Provider 500, also said it was taking steps to reduce operating expenses by $10 million a year.

Datalink reported sales of $198.0 million for its third quarter ended Sept. 30, up almost 37 percent year over year from $144.9 million. But net earnings were $1.3 million, down a significant 63 percent from $3.5 million one year before.

Unisys

CEO: Peter Altabef

June 30, 2015: $19.99

Sept. 30, 2015: $11.90

Change: -40.47%

It's been a rocky road lately for Unisys, No. 19 on the CRN Solution Provider 500, which experienced the biggest third-quarter decline in stock price among the companies on our index. The company has been in turnaround mode for some time, including executing a $300 million restructuring plan and laying off more than 1,800 employees this year.

Unisys reported revenue of $739.2 million in its third quarter ended Sept. 30, down more than 19 percent year over year from $882.5 million. The company reported a loss of $9.6 million in the quarter compared to a $47.8 million profit one year earlier.