The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Insight Enterprises (NASDAQ:NSIT) and the rest of the it distribution & solutions stocks fared in Q1.
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 7 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 1.9% on average since the latest earnings results.
Weakest Q1: Insight Enterprises (NASDAQ:NSIT)
With over 35 years of IT expertise and partnerships with more than 8,000 technology providers, Insight Enterprises (NASDAQ:NSIT) provides end-to-end digital transformation solutions that help businesses modernize their IT infrastructure and maximize the value of technology.
Insight Enterprises reported revenues of $2.10 billion, down 11.6% year on year. This print fell short of analysts’ expectations by 5.9%. Overall, it was a softer quarter for the company with a miss of analysts’ EPS estimates.
"In the first quarter, we delivered Adjusted earnings from operations and Adjusted diluted earnings per share in line with our expectations. We were pleased with the continued hardware momentum, led by commercial and corporate demand, and our gross margin expansion,” stated Joyce Mullen, President and Chief Executive Officer.
Insight Enterprises Total Revenue
Insight Enterprises delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 3.7% since reporting and currently trades at $132.89.
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 Total Revenue
Connection achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 11.2% since reporting. It currently trades at $69.
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 10.5% since the results and currently trades at $39.83.
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 number lagged analysts' expectations by 1.7%. Overall, it was a softer quarter as it also produced a miss of analysts’ EPS estimates.
The stock is down 6% since reporting and currently trades at $117.93.
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 print met analysts’ expectations. Zooming out, it was a mixed quarter with EPS guidance for next quarter missing analysts' estimates.
The stock is down 3.5% since reporting and currently trades at $49.45.
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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