PC Connection (CNXN) AI Stock Analysis

• Market Cap: $1.64B
• Dividend Yield: 0.78%
• Average Volume (3M): 89.11K
• Price to Earnings (P/E): 19.5
• Beta (1Y): 0.85
• Revenue Growth: 4.21%
• EPS Growth: 6.38%
• Country: US
• Employees: 2,580
• Sector: Technology
• Sector Strength: 79
• Industry: Technology Distributors
• EPS (TTM): 0.60
• Shares Outstanding: 25,397,238
• 10 Day Avg. Volume: 79,319
• 30 Day Avg. Volume: 89,108
• PEG Ratio: 34.06
• Price to Book (P/B): 2.05
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 31.01
• Enterprise Value/Market Cap: 0.96
• Enterprise Value/Revenue: 0.14
• Enterprise Value/Gross Profit: 2.99
• Enterprise Value/Ebitda: 3.48
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

• Rating: 78 Outperform
• Price Target: $75.00 ▲(15.60%Upside)

PC Connection has a strong financial foundation with consistent revenue growth and profitability. Technical indicators show moderate momentum, and valuation metrics suggest the stock is fairly priced. Positive aspects from the latest earnings call, such as revenue growth and strategic initiatives, are balanced by challenges like margin declines and cash flow issues. Overall, the stock presents a stable investment with some growth potential.

PC Connection Business Overview & Revenue Model

Company Description

PC Connection, Inc., together with its subsidiaries, provides various information technology (IT) solutions. The company operates through three segments: Business Solutions, Enterprise Solutions, and Public Sector Solutions. It offers IT products, including computer systems, data center solutions, software and peripheral equipment, networking communications, and other products and accessories, as well as provides services related to design, configuration, and implementation of IT solutions. The company markets its products and services through its websites comprising connection.com, connection.com/enterprise, connection.com/publicsector, and macconnection.com. It serves small to medium-sized businesses (SMBs) that include small office/home office customers; government and educational institutions; and medium-to-large corporate accounts through outbound telemarketing and field sales, and marketing programs targeted to specific customer populations, as well as through digital, web, and print media advertising. The company was founded in 1982 and is headquartered in Merrimack, New Hampshire.

How the Company Makes Money

PC Connection generates revenue primarily through the sale of IT products, which includes hardware, such as computers and peripherals, and software solutions. The company operates through three primary segments: Business Solutions, Enterprise Solutions, and Public Sector Solutions, each targeting different customer bases. Revenue is driven by a combination of direct sales to end-users, as well as through service contracts where Connection provides technology solutions, managed services, and technical support. Key revenue streams include product sales, professional services, and solutions integration. Strategic partnerships with major technology vendors enhance its offerings, allowing Connection to provide customized solutions and maintain competitive pricing, which are critical factors in its earnings.

PC Connection Financial Statement Overview

Summary

PC Connection is performing well overall with solid financial health across the board. The income statement highlights strong profitability and operational efficiency. The balance sheet reveals a low leverage and a strong equity position, while the cash flow statement shows a good cash generation capability despite some recent declines. The company's financial position is stable, although attention should be given to maintaining growth momentum and addressing the recent slowing of cash flow generation.

Income Statement

PC Connection's income statement reveals consistent revenue growth, with a TTM revenue increase to $2.87 billion from $2.80 billion in the previous year. The gross profit margin remains robust at around 18.3%, reflecting efficient cost management. Net profit margin has slightly improved, reaching 3.04% for the TTM. EBIT and EBITDA margins are stable, indicating strong operational efficiency. However, the revenue growth rate has slowed compared to previous years, suggesting potential market saturation or increased competition.

Balance Sheet

The balance sheet is strong, with a low debt-to-equity ratio of 0.0012, indicating minimal reliance on debt financing. The equity ratio stands at a healthy 70.3%, reflecting a solid financial foundation. Return on Equity (ROE) is stable at 9.97%, showcasing efficient use of shareholder funds. The company has increased cash reserves, providing a cushion for future investments or downturns. However, the slight decline in equity between the latest TTM and the previous annual period suggests some challenges in retaining earnings.

Cash Flow

PC Connection demonstrates a strong cash flow position with a positive free cash flow of $56.5 million in the TTM. The operating cash flow to net income ratio is favorable at 0.73, indicating effective cash generation from operations. However, the free cash flow growth rate has slowed compared to previous periods, and there is a notable decline in operating cash flow from $173.9 million in the previous annual period to $64.2 million in the TTM. This could signal potential pressures on future liquidity.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.87B	2.80B	2.85B	3.12B	2.89B	2.59B
	Gross Profit
525.76M	519.79M	511.74M	526.18M	464.58M	418.81M
	EBIT
98.53M	97.06M	105.84M	120.55M	96.52M	72.07M
	EBITDA
108.31M	110.49M	118.22M	132.53M	108.72M	86.67M
	Net Income Common Stockholders
87.42M	87.09M	83.27M	89.22M	69.91M	55.77M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
351.95M	442.61M	297.19M	122.93M	108.31M	95.66M
	Total Assets
1.16B	1.30B	1.19B	1.10B	1.08B	1.02B
	Total Debt
4.61M	3.36M	4.91M	8.16M	6.79M	9.63M
	Net Debt
-142.97M	-174.96M	-140.04M	-114.77M	-101.52M	-86.02M
	Total Liabilities
308.39M	388.36M	347.61M	333.65M	401.69M	379.05M
	Stockholders Equity
852.67M	910.99M	840.77M	766.17M	682.47M	636.33M
Cash Flow		Free Cash Flow
56.52M	166.29M	188.36M	25.81M	47.45M	25.07M
	Operating Cash Flow
64.20M	173.87M	197.95M	34.89M	57.75M	36.10M
	Investing Cash Flow
41.02M	-115.29M	-160.20M	-9.08M	-8.73M	-11.03M
	Financing Cash Flow
-70.33M	-25.22M	-15.73M	-11.19M	-36.37M	-19.47M

PC Connection Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 64.88
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNXN, the sentiment is Negative. The current price of 64.88 is below the 20-day moving average (MA) of 67.54, above the 50-day MA of 64.18, and below the 200-day MA of 68.34, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 44.58 is Neutral, neither overbought nor oversold. The STOCH value of 27.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CNXN.

PC Connection Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNXN	78 Outperform	$1.64B	19.50	10.11%	0.78%	4.21%	6.38%
AVT	73 Outperform	$4.17B	13.95	6.42%	2.61%	-10.52%	-42.40%
ARW	71 Outperform	$6.10B	16.56	6.68%	―	-11.13%	-43.00%
NSIT	68 Neutral	$4.11B	26.28	11.37%	―	-8.73%	-35.37%
SCSC	67 Neutral	$904.28M	14.91	7.32%	―	-14.07%	-9.65%
Sector *	61 Neutral	$11.55B	10.41	-6.86%	2.93%	7.50%	-8.30%
VSH	51 Neutral	$1.89B	26.74	-3.14%	2.87%	-11.31%	-127.88%

PC Connection Corporate Events

PC Connection Approves Key Proposals at Annual Meeting

On May 14, 2025, PC Connection, Inc. held its Annual Meeting of Stockholders, where several key proposals were voted on and approved. These included the election of six directors, approval of executive compensation, amendments to stock plans, and the ratification of Deloitte & Touche LLP as the independent auditor for 2025. The meeting outcomes reflect the company’s ongoing governance and operational strategies, potentially impacting its market position and stakeholder relations.

PC Connection Reports Strong Q1 2025 Financial Results

On April 30, 2025, Connection reported its first quarter 2025 financial results, highlighting a 10.9% increase in net sales to $701 million and a 2.5% rise in net income to $13.5 million. The company announced a quarterly dividend of $0.15 per share and a $50 million increase in its share repurchase program, bringing the total authorization to $170 million. The results reflect strong demand for digital workplace solutions and datacenter modernization, contributing to a 20% growth in adjusted earnings per share. The Public Sector Solutions segment saw significant growth, with a 54.7% increase in net sales, driven by a 228% rise in federal government sales.