The Best And The Worst Channel Stocks In Q3 2020
Of the 24 companies on our watch list this quarter, 16 recorded stock price increases in the third quarter with eight recording stock price declines – including four by double-digit percentages. Take a look at whose shares managed to hold their value and which ones took the biggest losses.
Channel Stocks Muddle Through Ongoing COVID-19 Pandemic, Recession
Stock markets were riding high for the first couple of months of 2020 before plunging in March as the COVID-19 pandemic hit and many segments of the U.S. economy shut down. (The U.S. economy went into recession in February, according to the National Bureau of Economic Research.)
While stock markets recovered somewhat in the second quarter, it has been a very bumpy ride since with stocks returning very mixed results in the third quarter.
The Dow Jones ended trading on Sept. 30 at 27,781.70, up 7.63 percent from the 25,812.88 close on Jun 30. The tech-heavy Nasdaq has fared a bit better, closing at 11,167.51 on Sept. 30, up 11.02 percent from the 10,058.77 closing on June 30.
So how did publicly held solution provider companies and distributors fair? Of the 24 companies on our watch list this quarter, 16 recorded stock price increases between June 30, 2020 and Sept. 30, 2020 with eight recording stock price declines – including four by double-digit percentages.
Here‘s a look at how some of the biggest publicly traded solution provider companies faired in the third quarter of 2020, starting with companies with the biggest gains in share price, based on stock closing prices on June 30, 2020 and Sept. 30, 2020.
Also included are each company’s market capitalizations and change during the quarter.
Conduent
CEO: Cliff Skelton
June 30, 2020 Close: $2.39
Sept. 30, 2020 Close: $3.18
Change: +33.05%
Sept. 30, 2020 Market Cap: $665.35 Million (+33.16%)
Conduent had the biggest decline in its stock price (more than 61 percent) in the first half of 2020. The company wins applause for recording the biggest stock price gain, percentage-wise, (albeit less than $1) in the third quarter.
On Feb. 27, 2020, Cliff Skelton was appointed Conduent’s permanent CEO. He had served as interim CEO since August 2019 after then-CEO Ashok Vemuri stepped down.
For the first six months (ended June 30) of 2020 Conduent, No. 20 on the CRN Solution Provider 500, reported revenue of $2.07 billion, down nearly 9 percent from $2.27 billion in the first half of 2019. Conduent reported a $100 million net loss for the six-month period compared to a $1.34 billion net loss one year before.
EPAM Systems
CEO: Arkadiy Dobkin
June 30, 2020 Close: $252.01
Sept. 30, 2020 Close: $323.28
Change: +28.28%
Sept. 30, 2020 Market Cap: $18.06 Billion (+28.80%)
On Sept. 2 EPAM Systems, No. 27 on the CRN Solution Provider 500, said it had acquired Ricston Ltd., a leading software integration and connectivity solutions provider. The acquisition expands EPAM’s capabilities in application programming interfaces and microservices, complementing EPAM’s digital platform engineering and software development services.
For the first six months (ended June 30) of 2020 EPAM reported revenue of $1.28 billion, up nearly 20 percent from $1.07 billion in the first six months of 2019. Net income for the six-month period was $152.2 million, up more than 27 percent from $119.5 million one year before.
Computer Task Group
CEO: Filip Gyde
June 30, 2020 Close: $4.03
Sept. 30, 2020 Close: $4.97
Change: +23.33%
Sept. 30, 2020 Market Cap: $75.41 Million (+24.18%)
In March, Computer Task Group, No. 71 on the CRN Solution Provider 500, acquired StarDust, a Marseille, France-based provider of testing and quality assurance for digital services.
For the first six months (ended June 26) of 2020 CTG reported revenue of $176.1 million, down 10.9 percent from $197.6 million in the first six months of 2019. Net income for the six-month period was $2.9 million, up more than 84 percent from $1.6 million one year before.
The company will announce its third-quarter financial results on Oct. 20.
Cognizant Technology Solutions
CEO: Brian Humphries
June 30, 2020 Close: $56.82
Sept. 30, 2020 Close: $69.42
Change: +22.18%
Sept. 30, 2020 Market Cap: $37.64 Billion (+22.54%)
On Aug. 18, Cognizant completed its acquisition of New Signature, a Microsoft partner with expertise in Azure, Microsoft 365 and Dynamics 365. Cognizant is using New Signature as the nucleus of a new Microsoft Business Unit within Cognizant.
On Sept. 1 Cognizant announced a deal to acquire solution provider 10th Magnitude in a move that expands Cognizant’s expertise around Microsoft Azure and adds more capabilities to the new Microsoft Business Unit. (The acquisition was completed Oct. 1.)
For the first six months (ended June 30) of 2020 Cognizant, No. 6 on the CRN Solution Provider 500, reported revenue of $8.23 billion, down 0.3 percent from $8.25 billion in the first half of 2019. Net income for the six-month period was $728 million, down more than 23 percent from $950 million one year before.
Cognizant is scheduled to announce its third quarter results on Oct. 28.
Perficient
CEO: Jeffrey Davis
June 30, 2020 Close: $35.78
Sept. 30, 2020 Close: $42.74
Change: +19.45%
Sept. 30, 2020 Market Cap: $1.40 Billion (+18.24%)
In June, Perficient, No. 55 on the CRN Solution Provider 500, acquired Productora de Software (PSL), a Medellin, Columbia-based “nearshore” software development service provider.
Also in June, Perficient earned Google Cloud Premier Partner status.
For the first six months (ended June 30) of 2020 Perficient reported revenue of $291.9 million, up nearly 6 percent from $275.7 million in the first half of 2016. Net income for the six-month period was $15.6 million, flat with net income one year earlier.
Perficient will announce its third-quarter financial results on Oct. 29.
Synnex Corp.
CEO: Dennis Polk
June 30, 2020 Close: $119.77
Sept. 30, 2020 Close: $140.06
Change: +16.94%
Sept. 30, 2020 Market Cap: $7.21 Billion (+18.37%)
On Jan. 9, Synnex announced a plan to separate into two independent companies, splitting off the Concentrix business that Synnex acquired in 2006. On March 25 Synnex temporarily put the plan on hold citing the COVID-19 pandemic and subsequent economic downturn.
But Synnex has resumed preparing for the split, including filing a Form 10 Registration Statement with the U.S. Securities and Exchange Commission on Sept. 8 for the spin-off. The company said the proposed separation remains on track for completion by the end of 2020.
For the first nine months (ended Aug. 31) of fiscal 2020 Synnex reported revenue of $17.26 billion, up 0.5 percent from $17.18 billion in the first nine months of fiscal 2019. Net income for the nine-month period was $314.0 million, down 3.3 percent from $324.7 million one year earlier.
Insight Enterprises
CEO: Kenneth Lamneck
June 30, 2020 Close: $49.20
Sept. 30, 2020 Close: $56.58
Change: +15.00%
Sept. 30, 2020 Market Cap: $1.98 Billion (+14.85%)
Insight Enterprises, No. 15 on the CRN Solution Provider 500, entered 2020 having completed its $581 million acquisition of PCM in August 2019.
For the first six months (ended June 30) of 2020 Insight reported sales of $4.11 billion, up 17 percent from $3.52 billion in the first six months of 2019. Net earnings for the six-month period were $80.3 million, down 10 percent from $89.3 million one year before.
Arrow Electronics
CEO: Michael Long
June 30, 2020 Close: $68.69
Sept. 30, 2020 Close: $78.66
Change: +14.51%
Sept. 30, 2020 Market Cap: $6.11 Billion (+13.06%)
For the first six months of 2020 (ended June 27) distributor Arrow Electronics reported sales of just under $13.0 billion, down 10.4 percent from $14.5 billion in the first half of 2019. The company reported net income of $182.3 million for the six-month period compared to a net loss of $408.2 million one year earlier (which included a second-quarter $698 million impairment charge).
DXC Technology
CEO: Mike Salvino
June 30, 2020 Close: $16.50
Sept. 30, 2020 Close: $17.85
Change: +8.18%
Sept. 30, 2020 Market Cap: $4.54 Billion (+8.43%)
On March 10 DXC Technology struck a deal to sell its U.S. state and local health and human services business to Veritas Capital for $5.0 billion. The sale was completed Oct. 1 and the new business has been named Gainwell Technologies. DXC will use the proceeds from the sale to pay down debt.
On July 20 DXC, No. 3 on the CRN Solution Provider 500, reached an agreement to sell its healthcare software provider business to Dedalus group, a European healthcare and diagnostic software company, for $525 million. That sale is expected to close by March 2021.
For the fiscal 2021 first quarter (ended June 30) DXC reported revenue of $4.50 billion, down nearly 8 percent from $4.89 billion in the first quarter of fiscal 2020. For the quarter DXC reported a $205 million net loss compared to net income of $163 million one year before.
CGI
CEO: George Schindler
June 30, 2020 Close: $63.00
Sept. 30, 2020 Close: $67.77
Change: +7.57%
Sept. 30, 2020 Market Cap: $17.62 Billion (+8.00%)
For the first nine months (ended June 30) of fiscal 2020 Montreal-based CGI reported revenue of CAN$9.24 billion (U.S. $6.96 billion), up 1 percent from CAN$9.15 billion (U.S. $6.89 billion) in the first nine months of fiscal 2019.
Net earnings for the nine-month period were CAN$865.9 million (U.S. $652.3 million), down nearly 8 percent from CAN$939.1 million (U.S. $707.5 million) one year before.
CGI is No. 12 on the CRN Solution Provider 500.
SS&C Technologies
CEO: William Stone
June 30, 2020 Close: $56.48
Sept. 30, 2020 Close: $60.52
Change: +7.15%
Sept. 30, 2020 Market Cap: $15.59 Billion (+7.57%)
On May 18 SS&C, a leading provider of IT solutions to the financial services industry, completed its acquisition of Innovest Systems, a provider of Internet-based technology for trust accounting, payments and unique asset servicing.
For the first six months (ended June 30) of 2020 SS&C reported revenue of $2.31 billion, up more than 1 percent from $2.29 billion in the first half of 2019. The company reported net income of $268.7 million for the six-month period, up 33 percent from $201.9 million one year earlier.
SS&C will release its third quarter financial results on Oct. 28.
Accenture
CEO: Julie Sweet
June 30, 2020 Close: $214.72
Sept. 30, 2020 Close: $225.99
Change: +5.25%
Sept. 30, 2020 Market Cap: $143.71 Billion (+5.05%)
Accenture, No. 2 on the CRN Solution Provider 500, has continued its aggressive acquisition strategy of recent years into 2020. Since the start of the year Accenture has acquired several companies in IoT and processing technology for manufacturing and industrial use, including PLM Systems and Calisto.
Cybersecurity technology and expertise has also been on the company’s shopping list, acquiring startup Revolutionary Security and consulting firm Context Information Security – the latter for $139 million. In August the company acquired digital content creation and production company CreativeDrive.On Sept. 17 Accenture launched Accenture Cloud First, an initiative with a $3 billion investment to help clients accelerate their digital transformation efforts and their move to the cloud.
For Accenture’s fiscal 2020 fourth quarter (ended Aug. 31) the company reported revenue of $10.84 billion, down 2 percent from $11.06 billion in the fiscal 2019 fourth quarter. Net income for the quarter was $1.31 billion, up 14 percent from $1.15 billion one year earlier.
For all of fiscal 2020 (ended Aug. 31) Accenture reported revenue of $44.33 billion, up 2.6 percent from $43.22 billion in fiscal 2019. Net income for the year was $5.19 billion, up 7 percent from $4.85 billion one year before.
ePlus Technology
CEO: Mark Marron
June 30, 2020 Close: $70.68
Sept. 30, 2020 Close: $73.20
Change: +3.57%
Sept. 30, 2020 Market Cap: $992.11 Million (+3.98%)
On May 20 ePlus, No. 35 on the CRN Solution Provider 500, announced a stock repurchase program to buy back up to 500,000 outstanding shares of common stock over the next 12 months.
For its fiscal 2021 first quarter (ended June 30) ePlus reported sales of $355.0 million, down 6.9 percent from $381.4 million in the first quarter of fiscal 2020. Net income for the quarter was $17.4 million, up 7.2 percent from $16.2 million one year before.
CDW
CEO: Christine Leahy
June 30, 2020 Close: $116.18
Sept. 30, 2020 Close: $119.53
Change: +2.88%
Sept. 30, 2020 Market Cap: $17.87 Billion (+8.07%)
On July 21 CDW said it had hired Sanjay Sood for the newly created post of chief technology officer, following the planned retirement of Jon Stevens, senior vice president and chief information officer.
On July 1 CDW announced that it had acquired IGNW, a provider of cloud-native services and software-development and data orchestration capabilities. IGNW provides services across all the major cloud platforms and is a leading Cisco System’s Digital Solutions Integrator Partner.
For the first half of 2020 (ended June 30) CDW, No. 5 on the CRN Solution Provider 500, reported revenue of $8.75 billion, up 1.9 percent from $8.59 billion in the first half of 2019. Net income for the six-month period was $357.0 million, up 2.2 percent from $349.5 million one year before.
ManTech International
CEO: Kevin Phillips
June 30, 2020 Close: $68.49
Sept. 30, 2020 Close: $68.88
Change: +0.57%
Sept. 30, 2020 Market Cap: $2.78 Billion (+0.83%)
On June 15 ManTech named Matt Tait as the company’s chief operating officer, effective July 1, reporting to president and CEO Kevin Phillips. The company also announced an organizational change to realign its two business groups, Mission Solutions & Services (MSS) and Mission, Cyber & Intelligence Solutions (MCIS) and create three business sectors: Intelligence, Defense and Federal Civilian.
For the first six months (ended June 30) of 2020 ManTech reported revenue of $1.24 billion, up nearly 20 percent from $1.04 billion in the first half of 2019. Net income for the six-month period was $58.6 million, up more than 29 percent from $45.3 million one year earlier.
ManTech will announce its third quarter financial results on Nov. 5.
Tyler Technologies
CEO: Lynn Moore Jr.
June 30, 2020 Close: $346.88
Sept. 30, 2020 Close: $348.56
Change: +0.48%
Sept. 30, 2020 Market Cap: $14.03 Billion (+1.72%)
Since Sept. 23 Tyler Technologies, a provider of software and services for the public sector, has been in the process of responding to a security incident involving a ransomware attack that gained access to the company’s corporate phone system and IT network and disrupted access to some internal systems.
For the first six months of 2020 (ended June 30) Tyler Technologies reported revenue of $547.6 million, up nearly 5 percent from $522.2 million in the first half of 2019. Net income for the six-month period was $101.4 million, up 71 percent from $59.3 million one year before.
Quality Technology Services
CEO: Chad Williams
June 30, 2020 Close: $64.09
Sept. 30, 2020 Close: $63.02
Change: -1.67%
Sept. 30, 2020 Market Cap: $3.87 Billion (-1.38%)
On Oct. 1 QTS, a provider of hybrid colocation and mega-scale data center services, opened phase one of a new mega data center campus in Hillsboro, Ore. Phase one is a 158,000 square-foot data center with 24 megawatts of gross power capacity. Earlier this year the company said the 9.2-acre site will eventually have five mega data centers totaling approximately 1.5 million square feet.
For the first six months (ended June 30) of 2020 QTS reported revenue of $257.9 million, up 11 percent from $231.9 million in the first half of 2019. But net income for the six-month period was down 36 percent to $18.3 million from $28.7 million one year before.
QTS is No. 61 on the CRN Solution Provider 500.
CACI International
CEO: John Mengucci
June 30, 2020 Close: $216.88
Sept. 30, 2020 Close: $213.16
Change: -1.72%
Sept. 30, 2020 Market Cap: $5.35 Billion (-1.67%)
On Aug. 12 CACI said it had acquired Ascent Vision Technologies, a developer of electro-optical, infrared imaging technology for airborne, ground and maritime systems. The acquisition price was not disclosed.
In June CACI was awarded a $1.5 billion contract, the single largest contract in the company’s history, to provide transport and cybersecurity IT services to the National Geospatial-Intelligence Agency.
For its fiscal 2020 fourth quarter (ended June 30) CACI reported revenue of $1.50 billion, up nearly 9 percent from $1.37 billion in the fourth quarter of fiscal 2019. Net income for the quarter was $93.7 million, up more than 87 percent from $50.0 million one year before.
For all of fiscal 2020 (ended June 30) CACI reported revenue of $5.72 billion, up nearly 15 percent from just under $5.00 billion in fiscal 2019. Net income for the fiscal year was $321.5 million, up 21 percent from $265.6 million one year earlier.
CACI, No. 18 on the CRN Solution Provider 500, will report its fiscal 2021 first quarter on Oct. 28.
Unisys
CEO: Peter Altabef
June 30, 2020 Close: $10.91
Sept. 30, 2020 Close: $10.67
Change: -2.20%
Sept. 30, 2020 Market Cap: $672.39 Million (-2.13%)
On March 16 Unisys, No. 23 on the CRN Solution Provider 500, completed the $1.2 billion sale of its U.S. federal business to SAIC. The company is using the money largely to pay down debt and reduce pension obligations.
For the first six months (ended June 30) of 2020 Unisys reported revenue of $954.2 million, down more than 17 percent from $1.12 billion in the first six months of 2019. The company reported net income of $936.7 million (including $1.07 billion in income from discontinued operations) for the six-month period compared to net income of $6.8 million one year earlier.
Unisys will report its third-quarter results on Oct. 27.
Avnet
CEO: Phil Gallagher
June 30, 2020 Close: $27.89
Sept. 30, 2020 Close: $25.84
Change: -7.35%
Sept. 30, 2020 Market Cap: $2.55 Billion (-7.41%)
On Aug. 3 William Amelio stepped down as the distributor’s CEO, effective immediately. No reason was given for his departure. Amelio had held the position since July 2016.
Avnet named Phil Gallagher as interim CEO. He had been serving as global president of Avnet’s electronic components business since April 2017.
For its fiscal 2020 fourth quarter (ended June 27) Avnet reported sales of $4.16 billion, down 11 percent from $4.68 billion in the fourth quarter of fiscal 2019. Net income for the quarter was $52.2 million compared to a $31.8 million loss one year earlier.
For all of fiscal 2020 Avnet reported sales of $17.63 billion, down nearly 10 percent from $19.52 billion in fiscal 2019. The company reported a net loss of $31.1 million for fiscal 2020 compared to net income of $176.3 million one year before.
Avnet will report its fiscal 2021 first quarter results on Oct. 28.
Connection
CEO: Timothy McGrath
June 30, 2020 Close: $46.36
Sept. 30, 2020 Close: $41.06
Change: -11.43%
Sept. 30, 2020 Market Cap: $1.11 Billion (-8.26%)
For the first six months of 2020 (ended June 30) Connection, No. 24 on the CRN Solution Provider 500, reported sales of $1.26 billion, down more than 8 percent from $1.37 billion in the first half of 2019. Net income for the six-month period was $22.5 million, down 38 percent from $36.4 million one year before.
Consolidated Communications
CEO: Bob Udell
June 30, 2020 Close: $6.77
Sept. 30, 2020 Close: $5.69
Change: -15.95%
Sept. 30, 2020 Market Cap: $418.38 Million (-15.39%)
For the first six months (ended June 30) of 2020 Consolidated Communications, an internet, cable TV and phone services provider, reported revenue of $650.8 million, down 3.2 percent from $672.2 million in the first half of 2019. The company reported net income of $29.6 million for the six-month period compared to a $14.5 million loss one year earlier.
Consolidated Communications is No. 34 on the CRN Solution Provider 500.
Perspecta
CEO: Mac Curtis
June 30, 2020 Close: $23.23
Sept. 30, 2020 Close: $19.45
Change: -16.27%
Sept. 30, 2020 Market Cap: $3.13 Billion (-16.13%)
Perspecta, a provider of government and military IT solutions, was created in 2018 when DXC Technology spun off its public services business and merged it with government consultant Vencore and government background check services provider KeyPoint.
For its fiscal 2021 first quarter (ended July 3) Perspecta reported revenue of $1.11 billion, flat with revenue in the first quarter of fiscal 2020. The company reported a $3 million loss for the quarter compared to net income of $31 million one year before.
Perspecta, No. 19 on the CRN Solution Provider 500, will announce its fiscal 2021 second quarter financial results on Nov. 10.
ScanSource
CEO: Mike Baur
June 30, 2020 Close: $24.09
Sept. 30, 2020 Close: $19.83
Change: -17.68%
Sept. 30, 2020 Market Cap: $502.92 Million (-17.63%)
In July ScanSource said the COVID-19 pandemic and ensuing recession had dramatically affected its business and announced plans to lay off 200 employees and close down its Canpango Salesforce deployment business – all part of a $30 million expense reduction initiative.
For the fourth quarter (ended June 30) of fiscal 2020 ScanSource reported sales of $636.5 million, down nearly 22 percent from $811.4 million in the fourth quarter of fiscal 2019. The company reported a $217.3 million net loss for the quarter compared to net income of $11.6 million one year before.
For all of fiscal 2020 (ended June 30) ScanSource reported revenue of $3.05 billion, down 6.2 percent from $3.25 billion in fiscal 2019. The company reported a net loss of $192.7 million for the fiscal year compared to net income of $57.6 million one year earlier.