As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the it distribution & solutions industry, including ePlus (NASDAQ: PLUS) and its peers.
IT Distribution & Solutions will be buoyed by the increasing complexity of IT ecosystems, rising cloud adoption, and demand for cybersecurity solutions. Enterprises are less likely than ever to embark on these complicated journeys solo, and companies in the sector boast expertise and scale in these areas. However, cloud migration also means less need for hardware, which could dent demand for large portions of the product portfolio and hurt margins. Additionally, planning for potentially supply chain disruptions is ongoing, as the COVID-19 pandemic showed how damaging a pause in global trade could be in areas like semiconductor procurement.
The 8 it distribution & solutions stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was in line.
While some it distribution & solutions stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.3% since the latest earnings results.
Best Q3: ePlus (NASDAQ: PLUS)
Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ: PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.
ePlus reported revenues of $608.8 million, up 23.4% year on year. This print exceeded analysts’ expectations by 17.5%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
"Fiscal 2026 is off to a very strong start as the strength from the first quarter carried into the second quarter, with net sales growing 23.4% and diluted EPS increasing almost 63%. This quarter marks an important milestone for ePlus, as we posted quarterly gross billings exceeding $1 billion for the first time in our history. Our second-quarter performance reflects steady progress in executing our strategic priorities as we reported double-digit growth in key financial metrics: revenue, gross profit, net earnings from continuing operations, Adjusted EBITDA and EPS," commented Mark Marron, president and CEO of ePlus.
ePlus pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 20.2% since reporting and currently trades at $88.25.
Is now the time to buy ePlus? Access our full analysis of the earnings results here, it’s free for active Edge members.
TD SYNNEX (NYSE: SNX)
Serving as the crucial middleman in the technology supply chain, TD SYNNEX (NYSE: SNX) is a global technology distributor that connects thousands of IT manufacturers with resellers, helping businesses access hardware, software, and technology solutions.
TD SYNNEX reported revenues of $15.65 billion, up 6.6% year on year, outperforming analysts’ expectations by 3.5%. The business had a stunning quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ EPS guidance for next quarter estimates.
The market seems content with the results as the stock is up 3.3% since reporting. It currently trades at $155.34.
Is now the time to buy TD SYNNEX? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Connection (NASDAQ: CNXN)
Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ: CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.
Connection reported revenues of $709.1 million, down 2.2% year on year, falling short of analysts’ expectations by 4.7%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and EPS estimates.
As expected, the stock is down 4.3% since the results and currently trades at $58.18.
Read our full analysis of Connection’s results here.
ScanSource (NASDAQ: SCSC)
Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ: SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.
ScanSource reported revenues of $739.7 million, down 4.6% year on year. This number lagged analysts' expectations by 6.1%. Aside from that, it was a satisfactory quarter as it also recorded a beat of analysts’ EPS estimates but a significant miss of analysts’ revenue estimates.
ScanSource had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is down 1.3% since reporting and currently trades at $41.29.
Read our full, actionable report on ScanSource here, it’s free for active Edge members.
CDW (NASDAQ: CDW)
Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ: CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.
CDW reported revenues of $5.74 billion, up 4% year on year. This print was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but revenue in line with analysts’ estimates.
The stock is down 7.4% since reporting and currently trades at $143.31.
Read our full, actionable report on CDW here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
