The Best (And Worst) Channel Stocks Of Q1 2014

A Nearly Even Split Between Stock Gainers And Losers In Q1

Nearly all of the publicly traded solution providers and distributors tracked by CRN rode the Wall Street wave in 2013 to double-digit increases in their stock prices. But the markets have been more ambiguous lately with the Dow Jones Index down 0.72 percent and the Nasdaq up 0.54 percent between Dec. 31 and March 31. Likewise, of the 25 publicly traded solution providers and distributors on our list, 12 recorded increases in their stock prices and 13 saw the value of their shares drop.

Stock prices and financial performance here seemingly have little to do with each other. Perficient, which reliably reports sales and income growth, showed the biggest share-price drop in the quarter. Systemax, which reported revenue and income declines in its fourth quarter, had the second largest stock-price gain among companies on our list.

Here's a look at who was up and who was down in the first quarter of 2014, based on stock closing prices between Dec. 31, 2013 and March 31, 2014.

Perficient

CEO: Jeffrey Davis

Dec. 31, 2013: $23.42

March 31, 2014: $18.12

Change: -22.63%

St. Louis-based Perficient (No. 79 on the CRN 2013 Solution Provider 500 list) recorded one of the biggest gains in its share price in 2013, so it's something of a shock that the drop in its stock's value in the first quarter of 2013 was the biggest among the solution providers and distributors on our list.

Perhaps investors are just taking some profits from their 2013 gains. Another factor could be Perficient's aggressive acquisition strategy that, while positioning the company in the long term, consumes a lot of cash.

Black Box

CEO: Michael McAndrew

Dec. 31, 2013: $29.80

March 31, 2014: $24.34

Change: -18.32%

For the company's third quarter ended Dec. 28 Black Box reported sales of $239.7 million, down 2.9 percent from the same period one year earlier. But net income was up almost 20 percent to $6.7 million.

Lawrence, Pa.-based Black Box is No. 34 on the CRN 2013 Solution Provider 500 list.

PC Connection

CEO: Timothy McGrath

Dec. 31, 2013: $24.85

March 31, 2014: $20.32

Change: -18.23%

PC Connection had the largest share price increase in 2013 among the companies on our list. As with Perficient, the steep drop in the stock price in the first quarter may be a case of investor profit-taking.

For all of fiscal 2013 ended Dec. 31 Merrimack, N.H.-based PC Connection reported sales of $2.22 billion, up 2.9 percent from fiscal 2012. PC Connection (No. 25 on the CRN 2013 Solution Provider 500 list) will release the results of its first fiscal quarter May 1.

Synnex

CEO: Kevin Murai

Dec. 31, 2013: $67.40

March 31, 2014: $60.61

Change: -10.07%

For its fiscal first quarter ended Feb. 28 distributor Synnex reported sales of $3.03 billion, up 23 percent from the first quarter of fiscal 2013. Earnings were $38.4 million, up 15.1 percent from a year earlier.

On Jan. 31 Fremont, Calif.-based Synnex completed the initial close of its $505 million acquisition of IBM's CRM business, an operation Synnex planned to combine with its Concentrix wholly owned subsidiary that provides customer engagement services.

SS&C Technologies

CEO: William Stone

Dec. 31, 2013: $44.26

March 31, 2014: $40.02

Change: -9.58%

In February Windsor, Conn.-based SS&C technologies reported that sales in its fourth quarter ended Dec. 31, 2013, were $182.5 million, up more than 6 percent, while net income surged 67 percent to just more than $16 million.

For all of fiscal 2013, SS&C's sales were $712.7 million, up a hefty 29 percent from fiscal 2012. And net income for the year was $117.9 million, a gain of 157 percent from the prior year. (SS&C is No. 40 on the CRN 2013 Solution Provider 500.)

Unisys

CEO: J. Edward Coleman

Dec. 31, 2013: $33.57

March 31, 2014: $30.46

Change: -9.26%

For its fiscal 2013 ended Dec. 31, Blue Bell, Pa.-based Unisys (No. 19 on the CRN 2013 Solution Provider 500 list) reported sales of $3.46 billion, down 6.7 percent from fiscal 2012. Earnings for the year were down 28.7 percent to $92.3 million.

CGI Group

CEO: Michael Roach

Dec. 31, 2013: $33.46

March 31, 2014: $30.92

Change: -7.59%

CGI had a rough year in 2013 given its unfortunate role at the center of the Healthcare.gov controversy, probably the year's biggest IT disaster. CGI held the $93.7 million contract to build the health insurance exchange and when it failed to work during its October launch many people pointed fingers at the Montreal-based computer services company.

CGI (No. 15 on the CRN 2013 Solution Provider 500 list) in January reported that sales in its first fiscal quarter ended Dec. 31, 2013, were C$2.64 billion (approximately $2.41 billion), up 4.4 percent from the same period one year earlier. Net income for the quarter was C$189.8 million (approximately $173.1 million), up by a factor of more than seven from one year before.

Micros Systems

CEO: Peter Altabef

Dec. 31, 2013: $57.37

March 31, 2014: $52.93

Change: -7.74%

Micros Systems (No. 33 on the CRN 2013 Solution Provider 500 list) reported revenue of $345.6 million for its second fiscal quarter ended Dec. 31, up 6.5 percent from the same period one year before. But the Columbia, Md.-based company's net income for the quarter was down 1.65 percent year over year to $43.6 million.

PCM

CEO: Frank Khulusi

Dec. 31, 2013: $10.27

March 31, 2014: $9.78

Change: -4.77%

For its fiscal year ended Dec. 31 PCM (No. 27 on the CRN 2013 Solution Provider 500 list) reported sales of $1.42 billion, flat with fiscal 2012 sales. But the El Segundo, Calif.–based company's net income for the year soared 59.6 percent to $8.1 million.

The value of PCM's shares could begin to rise, however, following recent news that Firoz Lalji, chairman of PCM rival Zones, has quietly acquired 5.02 percent of PCM's shares. That has led to speculation that PCM could be in for an acquisition bid or hostile takeover.

ScanSource

CEO: Mike Baur

Dec. 31, 2013: $42.42

March 31, 2014: $40.77

Change: -3.91%

For its second fiscal quarter ended Dec. 31, Greenville, S.C.-based ScanSource reported sales of $740.6 million, down just less than 1 percent from the same period one year before. Net income, however, rose almost 12 percent year over year to $18.3 million.

Accenture

CEO: Pierre Nanterme

Dec. 31, 2013: $82.22

March 31, 2014: $79.72

Change: -3.04%

Systems integrator Accenture (No. 3 on the CRN 2013 Solution Provider 500 list) reported that revenue for its second fiscal quarter ended Feb. 28 was $7.13 billion, up 1 percent from the same period one year before. But net income was $722.3 million, down 39 percent year over year.

ePlus

CEO: Phillip Norton

Dec. 31, 2013: $56.84

March 31, 2014: $55.76

Change: -1.90%

In its third fiscal quarter ended Dec. 31, Herndon, Va.-based ePlus (No. 40 on the CRN 2013 Solution Provider 500 list) reported sales of $267.2 million, up more than 10 percent from the same period one year before. Net income was $10.6 million, up more than 17 percent year over year.

Syntel

CEO: Prashant Ranade

Dec. 31, 2013: $90.95

March 31, 2014: $89.90

Change: -1.15%

Syntel (No. 44 on the CRN 2013 Solution Provider 500 list) reported in February that revenue in its fiscal 2013 ended Dec. 31 grew almost 14 percent to $824.8 million. Net income increased 18.4 percent year over year to $219.7 million.

The Troy, Mich.-based company will report its fiscal 2014 Q1 results April 17.

Cognizant

CEO: Francisco D'Souza

Dec. 31, 2013: $50.49

March 31, 2014: $50.60

Change: +0.22%

Cognizant executed a 2-for-1 stock split March 10 and the Dec. 31 closing price here is calculated to reflect the change. The Teaneck, N.J.-based company is the first on our watchlist to record share price growth in the quarter.

In February Cognizant (No. 10 on the CRN 2013 Solution Provider 500 list) reported that revenue for its fiscal 2013 (ended Dec. 31) was $8.84 billion, up 20.4 percent from fiscal 2012. Net income for the year was $1.23 billion, up 16.9 percent year over year.

CACI International

CEO: Kenneth Asbury

Dec. 31, 2013: $73.22

March 31, 2014: $73.80

Change: +0.79%

In January CACI, which provides IT solutions to government agencies, reported that revenue in its second fiscal quarter ended Dec. 31 was $894.2 million, down 4 percent from the same period one year earlier. Net income was $35.0 million, down 11.9 percent.

On April 2 (after the March 31 stock closing price above) Arlington, Va.-based CACI lowered its guidance for fiscal 2014 citing government budget uncertainty, which is leading to delays in contract awards for new business and lower run rates on professional services contracts. (CACI is No. 18 on the CRN 2013 Solution Provider 500 list.)

Premier Global Services

CEO: Boland Jones

Dec. 31, 2013: $11.59

March 31, 2014: $12.06

Change: +4.06%

Atlanta-based Premiere Global Services (No. 50 on the CRN 2013 Solution Provider 500 list) reported sales of $526.9 million for fiscal 2013 ended Dec. 31, up more than 4 percent from fiscal 2012. But net income declined more than 33 percent year over year in 2013 to $18.3 million.

Avnet

CEO: Rick Hamada

Dec. 31, 2013: $44.11

March 31, 2014: $46.53

Change: +5.49%

In January Phoenix-based distributor Avnet said its sales in the second quarter ended Dec. 28 reached $7.42 billion, up 10.8 percent from the same period one year earlier. Net income, however, was down 9.2 percent year over year to $124.9 million.

Avnet will report its second-quarter results April 24.

Computer Sciences Corp.

CEO: Mike Lawrie

Dec. 31, 2013: $55.88

March 31, 2014: $60.82

Change: +8.84%

Revenue in CSC's third fiscal quarter ended Dec. 27 was $3.23 billion, down 8.7 percent from the same period one year before, the company said in January. Net income was $146 million, down 71.5 percent year over year. (CSC is in the midst of a cost-cutting initiative and restructuring costs reduced the company's bottom line.)

Falls Church, Va.-based CSC is No. 5 on the CRN 2013 Solution Provider 500 list.

Arrow Electronics

CEO: Michael Long

Dec. 31, 2013: $54.25

March 31, 2014: $59.36

Change: +9.42%

Arrow Electronics reported in February that sales in its fourth fiscal quarter ended Dec. 31 reached $6.15 billion, up almost 14 percent year over year, while net income was down almost 23 percent to $134.8 million.

For all of fiscal 2014 the Englewood, Colo.-based distributor reported sales of $21.36 billion, up 4.7 percent from fiscal 2012. Net income for the year was down more than 21 percent to $399.4 million.

Ciber

CEO: David Peterschmidt

Dec. 31, 2013: $4.14

March 31, 2014: $4.58

Change: +10.63%

Ciber reported in February that sales for its fourth fiscal quarter ended Dec. 31 rose 1.5 percent to $209.9 million. Net income was $102,000, up from a $6.2 million loss the company reported in the fourth quarter of fiscal 2012 (including an $8 million restructuring charge that quarter).

For the full fiscal year ended Dec. 31 Ciber (No. 37 on the CRN 2013 Solution Provider 500 list) reported sales of $877.3 million, up 1.35 percent from fiscal 2012. The Greenwood Village, Colo.-based company reported a $14.5 million loss for the year, a slight improvement from a $14.6 million loss in fiscal 2012.

Insight Enterprises

CEO: Kenneth Lamneck

Dec. 31, 2013: $22.69

March 31, 2014: $25.11

Change: +10.67%

In February Insight Enterprises said sales in its fourth fiscal quarter ended Dec. 31 increased 4 percent to $1.40 billion. The Tempe, Ariz.-based company's net income for the period was down 2 percent to $20.4 million.

For all of fiscal 2013 Insight (No. 12 on the CRN 2013 Solution Provider 500 list) recorded sales of $5.14 billion, down 3 percent from fiscal 2012, while net income for the year was down 23 percent to $71.0 million.

Tech Data

CEO: Robert Dutkowsky

Dec. 31, 2013: $51.60

March 31, 2014: $60.96

Change: +18.14%

For its fiscal fourth quarter ended Jan. 31 Tech Data reported sales of $7.97 billion, up 7.1 percent from the same period a year before. Net income surged more than 147 percent in the quarter to $109.8 million.

For the fiscal year ended Jan. 31, Clearwater, Fla.-based Tech Data reported sales of $26.82 billion, up 5.8 percent from the previous fiscal year's sales.

Ingram Micro

CEO: Alain Monie

Dec. 31, 2013: $23.46

March 31, 2014: $29.56

Change: +26.0%

Ingram Micro reported sales of $11.8 billion for its fourth quarter ended Dec. 28, up 4 percent from the same period one year earlier. Net income for the quarter was $112.2 million, up 10.7 percent from the fourth quarter one year before.

For all of fiscal 2013 ended Dec. 28, 2013, the Santa Ana, Calif.-based distributor reported sales of $42.6 billion, up 12.5 percent from fiscal 2012.

Systemax

CEO: Richard Leeds

Dec. 31, 2013: $11.25

March 31, 2014: $14.91

Change: +32.53%

In February Systemax reported that sales in its fiscal fourth quarter ended Dec. 31 were $874.2 million, down 6.5 percent from the fourth quarter of fiscal 2012. The Port Washington, N.Y.-based company reported a loss of $19.8 million for the quarter.

For all of fiscal 2013 Systemax (No. 20 on the CRN 2013 Solution Provider 500 list) reported sales of $3.35 billion, down 5.4 percent from fiscal 2012. The company reported a loss of $43.8 million for the year compared with a loss of $8.3 million the previous year.

CDW

CEO: Thomas Richards

Dec. 31, 2013: $23.36

March 31, 2014: $27.44

Change: +17.47%

CDW, based in Vernon Hills, Ill., went public in mid-2013. In February the company reported sales in its fourth quarter ended Dec. 31 reached $2.71 billion, up more than 4 percent from the same period one year before. Net income was $60 million, up 80 percent year over year. For all of fiscal 2013 sales grew more than 6 percent to more than $10.77 billion.

In February CDW (No. 8 on the CRN 2013 Solution Provider 500 list) struck a deal with Google to begin offering Google Apps for Business as part of its growing cloud technology portfolio. The company is also a large-account reseller for Microsoft's Office 365 cloud application set.