The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how it distribution & solutions stocks fared in Q1, starting with TD SYNNEX (NYSE: SNX).
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 mixed Q1. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady as they are up 3.6% on average since the latest earnings results.
Weakest Q1: 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 $14.53 billion, up 4% year on year. This print fell short of analysts’ expectations by 1.7%. Overall, it was a softer quarter for the company with a miss of analysts’ EPS estimates.
“The strength of our business model allowed us to grow ahead of the market in Q1. Our end-to-end strategy, global reach and specialist go to market approach continues to empower us to capture a wide range of IT spend,” said Patrick Zammit, CEO of TD SYNNEX.
The stock is down 2% since reporting and currently trades at $122.96.
Read our full report on TD SYNNEX here, it’s free.
Best Q1: 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 $701 million, up 10.9% year on year, outperforming analysts’ expectations by 8.5%. The business had an incredible quarter with a solid beat of analysts’ EPS estimates.
Connection scored the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems content with the results as the stock is up 5% since reporting. It currently trades at $65.14.
Is now the time to buy Connection? Access our full analysis of the earnings results here, it’s free.
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 $704.8 million, down 6.3% year on year, falling short of analysts’ expectations by 9.4%. It was a slower quarter as it posted full-year revenue guidance missing analysts’ expectations.
ScanSource delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 14.8% since the results and currently trades at $41.37.
Read our full analysis of ScanSource’s results here.
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 $5.20 billion, up 6.7% year on year. This print beat analysts’ expectations by 5.3%. It was an exceptional quarter as it also put up a solid beat of analysts’ EPS estimates.
The stock is up 9.1% since reporting and currently trades at $179.
Read our full, actionable report on CDW here, it’s free.
Avnet (NASDAQ: AVT)
With a century-long history of adapting to technological evolution, Avnet (NASDAQ: AVT) is a global electronic components distributor that connects manufacturers of semiconductors and other electronic parts with businesses that need these components.
Avnet reported revenues of $5.32 billion, down 6% year on year. This number met analysts’ expectations. Zooming out, it was a mixed quarter as it also logged an impressive beat of analysts’ EPS estimates.
The stock is flat since reporting and currently trades at $51.
Read our full, actionable report on Avnet here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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