PC Connection (CNXN)
NASDAQ:CNXN
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PC Connection
(NASDAQ:CNXN)
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Rating:74Outperform
Price Target:
$67.00
▲(14.90% Upside)
Action:ReiteratedDate:02/06/26
The score is driven mainly by strong financial resilience (exceptionally low leverage) and a positive earnings call outlook (backlog strength, improving profitability, cost savings, and shareholder returns). Technicals are supportive with the stock above key moving averages, though momentum appears somewhat stretched. Valuation is fair but not notably cheap, and recent revenue contraction/cash-flow variability remain the primary fundamental risks.
Positive Factors
Conservative Balance Sheet
Extremely low leverage and meaningful equity growth provide durable financial flexibility. Consistent ROE (~8.8%–11.6%) indicates profitability without reliance on debt, supporting investment in services, buybacks/dividends, and resilience through IT spending cycles over the next several quarters.
Negative Factors
Sharp Recent Revenue Decline
A pronounced TTM revenue decline indicates meaningful top-line cyclicality and escalates execution risk. For a reseller model where scale drives vendor terms and services penetration, sustained revenue weakness could compress margins and slow reinvestment in growth initiatives over the coming 2–6 months.
Read all positive and negative factors
Positive Factors
Negative Factors
Conservative Balance Sheet
Extremely low leverage and meaningful equity growth provide durable financial flexibility. Consistent ROE (~8.8%–11.6%) indicates profitability without reliance on debt, supporting investment in services, buybacks/dividends, and resilience through IT spending cycles over the next several quarters.
Read all positive factors
PC Connection (CNXN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.50B
Dividend Yield1.02%
Average Volume (3M)82.44K
Price to Earnings (P/E)17.4
Beta (1Y)0.84
Revenue Growth3.19%
EPS Growth-4.91%
CountryUS
Employees2,580
SectorTechnology
Sector Strength88
IndustryTechnology Distributors
Share Statistics
EPS (TTM)0.91
Shares Outstanding25,198,471
10 Day Avg. Volume112,479
30 Day Avg. Volume82,438
Financial Highlights & Ratios
PEG Ratio-57.59
Price to Book (P/B)1.60
Price to Sales (P/S)0.51
P/FCF Ratio25.09
Enterprise Value/Market Cap0.87
Enterprise Value/Revenue0.46
Enterprise Value/Gross Profit2.43
Enterprise Value/Ebitda10.57
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)3.8
Revenue Forecast (FY)$3.04B
PC Connection Business Overview & Revenue Model
Company Description
PC Connection, Inc. (CNXN) is a leading technology solutions provider that specializes in delivering a wide range of IT products and services to businesses, educational institutions, and government agencies. Founded in 1982, the company operates p...
How the Company Makes Money
Connection primarily makes money by reselling third-party IT products and bundling them with services. Its core revenue stream is product revenue from the sale of computer hardware (e.g., desktops, laptops, servers, networking equipment, periphera...
PC Connection Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call conveyed predominantly positive momentum: strong segment-level gross profit, margin expansion, EPS and adjusted EBITDA growth, solid vertical performance (retail, financial services, healthcare), a new gross billings metric showing demand, robust liquidity, and shareholder-friendly capital returns (buybacks and a 33% dividend increase). Offsetting items included a sharp decline in public sector sales (a single large non-repeating project and rollout timing), working capital buildup, restructuring charges, and some margin compression in Enterprise. Management framed these negatives as temporary/tactical, with expected cost savings and a healthy backlog, positioning the company for growth in AI, cloud and security in 2026.Positive Updates
Record Gross Profit and Margin Expansion (Consolidated)
Consolidated gross profit rose 4.5% year-over-year to $135.6M and gross margin expanded 100 basis points to 19.3%, reflecting disciplined pricing and favorable product/customer mix.
Negative Updates
Significant Public Sector Revenue Decline
Public Sector net sales fell 36.8% to $90.8M and gross billings declined 23.7% to $170.7M due to a non-repeating project that spanned Q4 2024–Q1 2025 and delayed project rollouts; management cited ~ $30M headwind in Q4 and ~ $40M headwind in the following quarter.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Gross Profit and Margin Expansion (Consolidated)
Consolidated gross profit rose 4.5% year-over-year to $135.6M and gross margin expanded 100 basis points to 19.3%, reflecting disciplined pricing and favorable product/customer mix.
Read all positive updates
Company Guidance
Management guided to outperform the U.S. IT market by 200 basis points versus a roughly 4% blended market growth baseline, expecting Q1 2026 to be “flattish” on revenue with low‑to‑mid single‑digit gross profit growth and G&A running below 3%, and targeting an operating income margin of about 3.8% by year‑end; they flagged $5.9–6.2M of total severance/retirement charges ( $3.1M recognized in Q4) that should drive ~$7–8M of ongoing annual cost savings, noted backlog at its highest level since 2022, cited $406.7M of cash/short‑term investments, recurring returns to shareholders via a raised dividend of $0.27/share and an additional $50M buyback authorization, and highlighted TTM adjusted EBITDA of $126.4M (up 6%).PC Connection Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
92
Very Positive
Cash Flow
58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.87B | 2.80B | 2.85B | 3.12B | 2.89B |
| Gross Profit | 539.33M | 519.79M | 511.74M | 526.18M | 464.58M |
| EBITDA | 128.33M | 110.46M | 118.22M | 132.58M | 108.68M |
| Net Income | 83.72M | 87.09M | 83.27M | 89.22M | 69.91M |
Balance Sheet | |||||
| Total Assets | 1.35B | 1.30B | 1.19B | 1.10B | 1.08B |
| Cash, Cash Equivalents and Short-Term Investments | 406.68M | 442.61M | 297.19M | 122.93M | 108.31M |
| Total Debt | 996.00K | 3.36M | 4.91M | 8.16M | 10.21M |
| Total Liabilities | 440.80M | 388.36M | 347.61M | 333.65M | 400.91M |
| Stockholders Equity | 910.13M | 910.99M | 840.77M | 766.17M | 682.47M |
Cash Flow | |||||
| Free Cash Flow | 58.05M | 166.29M | 188.36M | 25.81M | 47.45M |
| Operating Cash Flow | 65.44M | 173.87M | 197.95M | 34.89M | 57.75M |
| Investing Cash Flow | 42.83M | -115.29M | -160.20M | -9.08M | -8.73M |
| Financing Cash Flow | -93.37M | -25.22M | -15.73M | -11.19M | -36.37M |
PC Connection Technical Analysis
Positive
58.31
Price Trends
60.25
Negative
59.29
Positive
61.00
Negative
Market Momentum
-0.48
Negative
51.81
Neutral
78.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNXN, the sentiment is Positive. The current price of 58.31 is below the 20-day moving average (MA) of 58.84, below the 50-day MA of 60.25, and below the 200-day MA of 61.00, indicating a neutral trend. The MACD of -0.48 indicates Negative momentum. The RSI at 51.81 is Neutral, neither overbought nor oversold. The STOCH value of 78.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CNXN.
PC Connection Risk Analysis
PC Connection disclosed 27 risk factors in its most recent earnings report. PC Connection reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
PC Connection Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $1.50B | 17.40 | 9.37% | 1.02% | 3.19% | -4.91% | |
71 Outperform | $5.06B | 16.25 | 4.22% | 2.77% | -2.30% | -29.75% | |
67 Neutral | $783.82M | 12.95 | 8.14% | ― | -4.88% | 2.57% | |
63 Neutral | $381.26M | 21.80 | 20.00% | 0.63% | 51.09% | 25.86% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $7.45B | 9.99 | 9.05% | ― | 3.16% | 1.09% | |
59 Neutral | $2.08B | 16.31 | 9.79% | ― | -6.69% | -51.74% |
* Technology Sector Average
CNXN
PC Connection
59.60
0.72
1.22%
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PC Connection Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
PC Connection boosts capital returns after Q4 performance
Positive
Feb 4, 2026
On February 4, 2026, Connection reported its fourth-quarter and full-year 2025 results, showing modest top-line pressure but improved profitability metrics. Fourth-quarter 2025 net sales edged down 0.8% to $702.9 million, while gross billings rose...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.