The Best And Worst Channel Company Stocks In The First Quarter Of 2018

Channel Stocks: A Majority Of Companies Record Share Price Gains Despite A Volatile Market In Q1 2018

Stock markets were generally on a roller coaster in the first quarter of 2018, with some trading days seeing swings of hundreds of points. The Dow Jones Index was down 2.49 percent in the quarter (between the Dec. 29, 2017 and March 29, 2018 closings), but the Nasdaq was up 2.32 percent.

So how did publicly held solution provider companies fair? Gainers outnumbered losers with 14 of the companies on our channel watch list recording stock price increases in the quarter, the majority by double-digit percentages, while 10 recorded stock price declines – several by hefty double-digit percentages.

Here's a look at who was up and who was down in the first quarter of 2018, starting with companies with the biggest gains in share price, based on stock closing prices on Dec. 29, 2017 and March 29, 2018.

CSRA

CEO: Larry Prior

Dec. 29, 2017: $29.92

March 29, 2018: $41.23

Change: +37.80%

CSRA is the government IT services company formed in late 2015 through the combination of SRA International and the federal government business of Computer Science Corp. Based in Falls Church, Va., CSRA is No. 14 on the CRN Solution Provider 500.

In February General Dynamics announced a deal to acquire CSRA for roughly $6.8 billion, at $40.75 per share, and assume CSRA's $2.8 billion in debt, putting the value of the deal at $9.6 billion. The announcement sent the price of CSRA's stock soaring on Feb. 12, the day of the announcement.

On March 18 public sector powerhouse CACI made a $7.2 billion counter bid to acquire rival CSRA. But CSRA rejected that offer and CACI rescinded its offer 10 days later.

SS&C Technologies

CEO: William Stone

Dec. 29, 2017: $40.48

March 29, 2018: $53.64

Change: +32.51%

On Jan. 11 SS&C announced that it had struck a deal to acquire DST Systems, a supplier of financial and healthcare IT solutions, for $5.4 billion. SS&C completed the acquisition on April 16.

For its first quarter ended March 31, SS&C reported revenue of $421.9 million, up 3.5 percent from $407.7 million in the same quarter one year earlier. Net income was $51.3 million, up 6.4 percent from $48.1 million one year before.

SS&C, based in Windsor, Conn., is No. 33 on the CRN Solution Provider 500.

Unisys

CEO: Peter Altabef

Dec. 29, 2017: $8.15

March 29, 2018: $10.75

Change: +31.90%

After losing more than 45 percent of their value in 2017, Unisys' shares gained back nearly 32 percent in the first quarter.

On Dec. 12 Unisys, No. 20 on the CRN Solution Provider 500, announced that Peter Altabef would become the company's chairman on April 26, 2018, replacing current chairman Paul Weaver, who retired. Altabef continues as the company's president and CEO.

For its first quarter ended March 31, Unisys, based in Blue Bell, Pa., reported revenue of $708.4 million, up 6.6 percent from $664.5 million in the first quarter of 2017. The company reported net income of $40.6 million compared to the $32.7 million loss one year earlier

Perficient

CEO: Jeffrey Davis

Dec. 29, 2017: $19.07

March 29, 2018: $22.92

Change: +20.19%

Perficient, No. 57 on the CRN Solution Provider 500, reported that revenue in its first quarter ended March 31 grew 9 percent to $120.9 million from $111.0 million in the first quarter of 2017. Net income in the quarter soared 82 percent to $4.9 million from $2.7 million one year earlier.

On April 2, just after the close of the quarter covered by this analysis, St. Louis-based Perficient acquired Southport Services Group, a Washington, D.C.-based digital transformation consulting services firm with expertise in business analytics and data warehousing solutions.

Conduent

CEO: Ashok Vemuri

Dec. 29, 2017: $16.16

March 29, 2018: $18.64

Change: +15.35%

Conduent is the $6.4 billion business process outsource service provider created when Xerox was split into two companies at the beginning of 2017.

For its first quarter ended March 31, Conduent, based in Florham Park, N.J., reported revenue of $1.42 billion, down 8.5 percent from $1.55 billion in the first quarter of 2017. The company reported a $50 million loss compared to a $6 million loss one year before.

On April 30, after the quarter covered in this analysis, Conduent announced a deal to sell a portion of its human resource management business to a private equity firm in a bid to cut costs.

CACI International

CEO: Kenneth Asbury

Dec. 29, 2017: $132.35

March 29, 2018: $151.35

Change: +14.36%

On March 18 public sector powerhouse CACI made a $7.2 billion counter bid to acquire rival CSRA. But CSRA rejected that offer, favoring another bid from General Dynamics, and CACI rescinded its offer 10 days later.

For its fiscal 2018 third quarter (ended March 31) CACI, based in Arlington, Va., and No. 16 on the CRN Solution Provider 500, reported revenue of $1.12 billion, up 3.5 percent from $1.09 billion in the third quarter of fiscal 2017. Net income for the quarter was $64.5 million, up nearly 60 percent from $40.4 million one year earlier.

Cognizant Technology Solutions

CEO: Francisco D'Souza

Dec. 29, 2017: $71.02

March 29, 2018: $80.50

Change: +13.35%

On March 12, Cognizant, No. 7 on the CRN Solution Provider 500, moved to expand its presence in the healthcare IT space by striking a deal to acquire Louiseville, Ky.-based Bolder Healthcare Solutions for an undisclosed amount. The acquisition closed April 19.

For its first quarter ended March 31 Cognizant, based in Teaneck, N.J., reported revenue of $3.91 billion, up more than 10 percent from $3.55 billion in the first quarter of 2017. But net income for the quarter was $520 million, down nearly 7 percent from $557 million one year before.

Syntel

CEO: Rakesh Khanna

Dec. 29, 2017: $22.99

March 29, 2018: $25.53

Change: +11.05%

For its first quarter ended March 31, Syntel, No. 38 on the CRN Solution Provider 500, reported revenue of $245.3 million, up 9 percent from $225.9 million in the first quarter of 2017. Syntel, based in Troy, Mich., reported net income of $45.6 million for the quarter, up 19 percent from $38.4 million one year earlier.

ManTech International

CEO: Kevin Phillips

Dec. 29, 2017: $50.19

March 29, 2018: $55.47

Change: +10.52%

Following an announcement in December, ManTech International chairman and CEO George Pedersen transitioned from his day-to-day management role as CEO on Jan. 1, 2018, to become executive chairman, continuing to guide overall corporate strategy and manage the vendor's mergers and acquisitions program. Kevin Phillips, who had served as company president since 2016, was named the new CEO.

For its first quarter ended March 31, ManTech reported revenue of $473.2 million, up 13 percent from $418.4 million in the first quarter of 2017. Net income for the quarter was $20.1 million, up 34 percent from $15.0 million one year before.

CGI Group

CEO: George Schindler

Dec. 29, 2017: $54.33

March 29, 2018: $57.64

Change: +6.09%

On Feb. 26 Montreal-based CGI announced plans to repurchase 3,230,450 shares at a cost of $231.4 million.

For its fiscal 2018 second quarter (ended March 31) CGI, No. 19 on the CRN Solution Provider 500, reported revenue of Canadian $2.95 billion (U.S. $2.29 billion), up 8.3 percent from CA$2.72 billion (U.S. $2.11 billion) in the second quarter of fiscal 2017. Net income for the quarter was CA$274.4 million (U.S. $213.3 million), essentially flat with net income in the same quarter one year before.

DXC Technology

CEO: Mike Lawrie

Dec. 29, 2017: $94.90

March 29, 2018: $100.53

Change: +5.93%

During the first quarter DXC Technology, No. 11 on the CRN Solution Provider 500, proceeded with its plan, announced in October, to merge its public sector business with two other companies (Vencore and KeyPoint) to create a new 14,000-employee public sector powerhouse. In March DXC said the new company, expected to launch this month, would be named Perspecta.

On March 1 DXC, based in Tysons Corner, Va., acquired M-Power Solutions, a Sydney, Australia-based solution provider that specializes in Oracle-cloud based systems.

Avnet

CEO: William Amelio

Dec. 29, 2017: $39.62

March 29, 2018: $41.76

Change: +5.40%

For its fiscal 2018 third quarter (ended March 31) distributor Avnet reported revenue of $4.80 billion, up 8 percent from $4.44 billion in the third quarter of fiscal 2017

ePlus Technology

CEO: Mark Marron

Dec. 29, 2017: $75.20

March 29, 2018: $77.70

Change: +3.32%

In January Mark Melvin, ePlus' chief technology officer for nearly 12 years, stepped down from his post, citing a desire to pursue new challenges.

On May 9 the company announced that Darren Raiguel, executive vice president of technology sales and a 20-year ePlus veteran, had been promoted to chief operating officer of ePlus Inc. and president of ePlus Technology Inc.

Based in Herndon, Va., ePlus is No. 35 on the CRN Solution Provider 500.

CDW

CEO: Thomas Richards

Dec. 29, 2017: $69.49

March 29, 2018: $70.31

Change: +1.18%

For its first quarter ended March 31, CDW reported sales of $3.61 billion, up nearly 11 percent from $3.26 billion in the first quarter of 2017. Net income in the first quarter was $127.0 million, more than double the $58.2 million in net income one year earlier.

Based in Vernon Hills, Ill., CDW is No. 5 on the CRN Solution Provider 500.

ScanSource

CEO: Mike Baur

Dec. 29, 2017: $35.80

March 29, 2018: $35.55

Change: -0.70%

ScanSource, based in Greenville, S.C., is the first company on our watch list whose stock declined in the first quarter.

For its fiscal 2018 third quarter (ended March 31) ScanSource reported sales of $895.6 million, up 10 percent from $813.5 million in the third quarter of fiscal 2017. But net income for the quarter was $10.6 million, down 14 percent from $12.4 million one year earlier.

Accenture

CEO: Pierre Nanterme

Dec. 29, 2017: $153.09

March 29, 2018: $150.55

Change: -1.66%

In January Accenture, No. 2 on the CRN Solution Provider 500, continued its aggressive acquisition strategy by buying Mackevision, a global producer of 3D-enabled and immersive product content in a move that boosts the company's digital services portfolio.

For its fiscal 2018 second quarter (ended Feb. 28) Dublin-based Accenture reported revenue of $10.07 billion, up nearly 15 percent from $8.76 billion in the second quarter of fiscal 2017. Net income for the quarter was $919.5 million, up nearly 4 percent from $887.2 million in the same quarter one year before.

Arrow Electronics

CEO: Michael Long

Dec. 29, 2017: $80.41

March 29, 2018: $77.02

Change: -4.22%

On Jan. 9 distributor Arrow Electronics, based in Centennial, Colo., completed its acquisition of eInfochips, a San Jose-based design and managed services company with 1,500 Internet-of-Things solution architects, engineers and software developers.

For its first quarter ended March 31 Arrow reported sales of $6.88 billion, up nearly 20 percent from $5.74 billion in the first quarter of 2017. Net income for the quarter was $139.1 million, up more than 21 percent from $114.7 million in the same quarter one year earlier.

Connection

CEO: Timothy McGrath

Dec. 29, 2017: $26.21

March 29, 2018: $25.00

Change: -4.62%

On March 29 Connection, No. 22 on the CRN Solution Provider 500, announced that Stephen Sarno had been named senior vice president, chief financial officer and treasurer of the company. He joined Merrimack, N.H.-based Connection from Wyless Inc., a provider of wireless data communication services, where he was CFO.

For its first quarter ended March 31 Connection reported sales of $624.9 million, down nearly 7 percent from $670.6 million in the first quarter of 2017. Net income for the first quarter was $11.3 million, up 52 percent from $7.4 million in the same quarter one year earlier.

Insight Enterprises

CEO: Kenneth Lamneck

Dec. 29, 2017: $38.29

March 29, 2018: $34.93

Change: -8.78%

Fueled by strong interest in Microsoft Azure services and a robust device refresh cycle, sales in Insight Enterprises' first quarter ended March 31 grew 19 percent to $1.76 billion from $1.48 billion in the first quarter of 2017. Net earnings for the quarter were $32.7 million, up 136 percent from $13.8 million in the same quarter one year before.

Insight Enterprises, No. 13 on the CRN Solution Provider 500, is a major Microsoft and Cisco channel partner based in Tempe, Ariz.

Early last year Insight acquired data center solution provider Datalink for $258 million.

Synnex Corp.

CEO: Dennis Polk

Dec. 29, 2017: $135.95

March 29, 2018: $118.40

Change: -12.91%

On Jan. 9 Synnex announced that long-time president and CEO Kevin Murai would retire from those posts, becoming the Fremont, Calif.-based company's chairman, while chief operating officer Dennis Polk would take over as president and CEO. The changes were effective March 1.

For the company's fiscal 2018 first quarter ended Feb. 28, Synnex reported revenue of $4.55 billion, up nearly 30 percent from $3.52 billion in the first quarter of fiscal 2017. Net income for the quarter was $24.4 million, down 60.5 percent from $61.8 million in the same quarter one year earlier.

The results included Synnex's Sept. 1 acquisition of Westcon-Comstor's $2.18 billion North American and Latin American businesses, part of an $830 million deal that also included a stake in Westcon-Comstor's $2.35 billion international business and an option to acquire an additional stake in that business.

Tech Data Corp.

CEO: Robert Dutkowsky

Dec. 29, 2017: $97.97

March 29, 2018: $85.13

Change: -13.11%

In March distributor Tech data reported that sales in its fiscal 2018 fourth quarter (ended Jan. 31) reached $11.09 billion, up 49 percent from $7.43 billion in the fourth quarter of fiscal 2017. Much of that gain was due to Tech Data's $2.6 billion acquisition of Avnet's Technology Solutions business on Feb. 27, 2017. Net income for the quarter was $1.3 million, down 98 percent from $78.8 million in the same quarter one year before.

For all of fiscal 2018 (ended Jan. 31) Tech Data reported sales of $36.78 billion, up 40 percent from $26.23 billion in fiscal 2017. Net income for the year was $116.6 million, down 40 percent from $195.1 million in fiscal 2017.

On April 19, after the period covered by this analysis, Tech Data announced that as of June 6 CEO Bob Dutkowsky would step aside from his day-to-day management role and chief operating officer Rich Hume would become the distributor's new CEO. Dutkowsky will become the Clearwater, Fla.-based distributor's chairman.

PCM

CEO: Frank Khulusi

Dec. 29, 2017: $9.90

March 29, 2018: $8.30

Change: -16.16%

On Jan. 24 PCM, based in El Segundo, Calif., acquired Epoch Universal, an Irvine, Calif.-based solution provider with broad technical skills and a footprint within U.S. enterprise customers. Epoch is a Cisco Gold Partner and holds certifications from the networking giant and VMware.

For its first quarter ended March 31, PCM, No. 25 on the CRN Solution Provider 500, reported sales of $542.8 million, up 4 percent from $522.8 million in the first quarter of 2017. Net income for the quarter was $2.8 million, down 33 percent from $4.2 million in the same quarter one year earlier.

Presidio

CEO: Bob Cagnazzi

Dec. 29, 2017: $19.17

March 29, 2018: $15.64

Change: -18.41%

In March solution provider powerhouse Presidio, No. 21 on the CRN Solution Provider 500, hit the one-year mark as a public company. Presidio went public on March 10, 2017, selling 16.7 million shares on the NASDAQ exchange and raising $233 million.

For its fiscal 2018 third quarter (ended March 31), New York-based Presidio reported revenue of $628.8 million, up 5.8 percent from $665.1 million in the third quarter of fiscal 2017. The company reported a net loss of $15.0 million for the quarter compared to net income of $0.6 million in the same quarter one year earlier.

In early April, after the period covered by this analysis, Presidio acquired Red Sky Solutions LLC, a Draper, Utah-based solution provider that focuses on cybersecurity services, managed services, and data center and cloud solutions. Presidio disclosed the acquisition in May during its third-quarter earnings call.

Black Box Network Services

CEO: Joel Trammell

Dec. 29, 2017: $3.55

March 29, 2018: $2.00

Change: -43.66%

Black Box began 2018 with a new CEO after Black Box's board of directors appointed Joel Trammell to be the company's new top executive on Nov. 17, replacing E.C. Sykes who retired effective immediately. The change came in the wake of continued financial troubles for the Lawrence, Pa.-based telecom services specialist, which is No. 40 on the CRN Solution Provider 500.