December 2, 2014 Patrick Sullivan
It’s been challenging times for the stocks of vendors that serve the nonprofit industry. While major stock markets were up modestly, an index of nine nonprofit sector stocks was down about 4.5 percent from the close of 2013 through the first three quarters of 2014.
As of September 30, the Dow Jones Industrial Average stood at 17,042.90; the NASDAQ was at 4,493.39; and the S&P 500 came in at 1,972.29. All three indices were up from their 2013 closes. The Dow gained 2.8 percent, up from 16,576.66. The NASDAQ was up from 4,176.59, a gain of 7.6 percent. The S&P 500 gained 6.7 percent, up from 1,848.36.
A number of public companies that serve the nonprofit industry also had modest gains during the first three quarters of 2014. Microsoft led the way, closing 2013 at $37.41 to sit at $46.36 at the end of September, a gain of nearly 24 percent.
Other winners include Salesforce, gaining $2.34 or 4.2 percent to close the quarter at $57.53. Salesforce introduced a new CRM suite for nonprofits, Salesforce1 for Nonprofits, earlier this year. eBay, too, saw gains in 2014, adding $1.76 to its 2013 closing price of $54.87, to finish up the third quarter at $56.63.
Oracle remained essentially unchanged, closing December 31 at $38.26 and September 30 at $38.28. The company’s stock dipped to $33.23 in mid-December but recovered in time for the new year. Its highest price was $42.81 in July.
Blackbaud had a bumpy ride this year, dipping as low as $29.87 in late April before recovering and closing the third quarter at $39.29, up 4.4 percent from its December 31 close of $37.65. It was a busy year for the Charleston, S.C.-based software vendor, snapping up education software vendor WhippleHill for $35 million and recently completing a $160 million deal to acquire MicroEdge, a player in the foundation, corporate social responsibility and donor-advised fund spaces.
Past analysis by The NonProfit Times of vendor stocks included about a dozen companies. One vendor previously on the list, Convio, was acquired by its main rival Blackbaud in 2012 for $16 a share, totaling $275 million. Blackbaud has also acquired eTapestry, Target Analytics, Kintera and Campaign Associates since 2006.
Serenic Software, a CRM developer that serves nonprofits, had closed 2013 at a share price of just $0.24. The company was sold to Sylogist for $8 million this past July. Sylogist is traded on the TSX (Toronto Stock Exchange). It closed 2013 at CAN $6.93 and the third quarter of 2014 at CAN $11.
Other stocks appearing in past analyses but not this one include marketing and database firm Infogroup, which was acquired by CCMP Capital Advisors in 2010 for $635 million and is no longer a public company; and Sage Nonprofit Solutions, acquired in 2013 by Accel-KKR and rebranded as Abila, now a private company.
There were as many losers in the nonprofit index as there were winners in the first three quarters of 2014. The biggest drop was seen by data broker Axciom, which fell from $36.98 to $16.55, a loss of 55 percent. The stock began to slide in March and dropped precipitously in May. Analysts blamed the nosedive on poor fiscal year fourth quarter performance, as well as increased government scrutiny on the data brokerage industry.
Alliance Data Systems (ADS), which owns marketing firm Epsilon, fell from $262.83 in December to $248.27 in September, a loss of 5.3 percent. The $3.6 billion company had a rocky road this year. The stock dipped during February to $234.20 before climbing steeply to a year-to-date high of $294.27. It then began another descent, dropping below $240 in April and May, climbed above $280 in July, and steadily fell again to its third quarter closing price.
Other losers in the nonprofit index are marketing services firms Harte-Hanks, which has experienced a steady 18.5 percent decline from $7.82 at the end of 2013 to close at $6.37 on Sept. 30, and Omnicom, going from $74.37 to $68.86, a loss of 7.4 percent.
Longer timelines paint a more optimistic picture, for all three major indices and the nonprofit index. Between Dec. 31, 2011 and the close of the third quarter 2014, the Dow gained 39.5 percent, or 4825.34 points, up from 12,217.56. The NASDAQ increased from 2,605.15, a gain of 1,888.24 points or 72.5 percent. The S&P 500 closed 2011 at 1,257.60 and gained 714.69 points, an increase of 56.8 percent.
The nonprofit index increased a total of 89.7 percent compared to closing prices on Dec. 31, 2011. Every stock analyzed closed higher this past September than at the end of 2011 with the exception of Harte-Hanks, which fell from $9.09 a share. Even this year’s big loser, Acxiom, increased from $12.21 at the close of 2011.
ADS was the biggest driver of these gains. The company’s stock more than doubled, up from $103.84. eBay’s stock gained nearly $30 from its 2011 close of $27.83. Omnicom was another big winner, up 54.5 percent from Dec. 31, 2011.
Most of the gains happened in 2013, with the exception of eBay, which had a strong 2012 and a relatively flat 2013, and Oracle, which surged mostly in 2014 before falling in September. The nonprofit index as a whole gained 53.7 percent in 2013.
These gains track with the larger indices, which ballooned in 2013 and kept increasing this year. The Dow added 3,472.36 points between Dec. 31, 2012 and Dec. 31, 2013, a gain of 26.5 percent. The NASDAQ gained 38.3 percent in 2013, and the S&P was up 29.6 percent. NPT