PC Connection (CNXN) AI Stock Analysis

• Market Cap: $1.55B
• Dividend Yield: 1.02%
• Average Volume (3M): 82.44K
• Price to Earnings (P/E): 17.4
• Beta (1Y): 0.83
• Revenue Growth: 3.19%
• EPS Growth: -4.91%
• Country: US
• Employees: 2,580
• Sector: Technology
• Sector Strength: 88
• Industry: Technology Distributors
• EPS (TTM): 0.91
• Shares Outstanding: 25,198,471
• 10 Day Avg. Volume: 112,479
• 30 Day Avg. Volume: 82,438
• PEG Ratio: -57.59
• Price to Book (P/B): 1.60
• Price to Sales (P/S): 0.51
• P/FCF Ratio: 25.09
• Enterprise Value/Market Cap: 0.88
• Enterprise Value/Revenue: 0.48
• Enterprise Value/Gross Profit: 2.53
• Enterprise Value/Ebitda: 11.01
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 3.8
• Revenue Forecast (FY): $3.04B

• Rating: 74 Outperform
• Price Target: $68.00 ▲(16.62% Upside)
• Action: Reiterated Date: 02/06/26
• Date: Action: Reiterated 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 a stronger equity base materially reduce financial risk and preserve strategic optionality. Over the next 2–6 months this supports continued share repurchases, dividend flexibility, and the ability to invest in higher-growth areas (AI, cloud, security) without relying on external debt.

Shift to higher-margin mix

A structural shift toward software and higher-margin solutions lifts gross margin durability versus pure hardware distribution. Recurring and software-related revenue improves predictability and long-term margin sustainability, enabling better operating leverage even if unit volumes remain cyclical.

Capital returns and cost discipline

Targeted restructuring savings plus disciplined SG&A management enhance structural profitability and free cash flow over time. Sustained cost savings improve margins and fund shareholder returns, while management’s demonstrated willingness to repurchase shares signals confidence in cash generation durability.

Negative Factors

Choppy revenue trend

Marked top-line volatility undermines revenue visibility and makes investment planning harder. Persistent swings reduce the reliability of earnings growth forecasts and limit the payoff from fixed-cost leverage in distribution, stressing the need for sustained demand recovery to drive durable margin expansion.

Working-capital volatility

Large swings in inventory and receivables create unpredictable cash conversion and compress free cash flow in some periods. For a distributor, this reduces the reliability of cash returns and can constrain reinvestment or buybacks if procurement timing or customer collections diverge from expectations.

Concentration & project lumpiness

Reliance on large, lumpy public-sector projects produces step-changes in revenue and backlog that impair predictability. Such concentration risks amplify downside if renewals or project timings slip, making sustainable top-line growth harder without broader diversification of large-account cadence.

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 primarily in the sectors of IT hardware and software distribution, offering core products such as computers, servers, networking equipment, and software solutions. PC Connection also provides value-added services including IT consulting, integration, and support, enabling clients to effectively manage their technology needs.

How the Company Makes Money

PC Connection generates revenue through multiple streams, primarily by selling technology products and solutions to a diverse customer base, including small to medium-sized businesses, large enterprises, and public sector organizations. The company's revenue model is largely based on the direct sale of IT hardware and software, as well as through its e-commerce platform, which allows for efficient product ordering and delivery. Key revenue streams include margins on product sales, service fees from IT consulting and support services, and recurring revenues from maintenance contracts and subscription-based software solutions. Significant partnerships with major technology vendors such as Microsoft, Dell, and HP also contribute to its earnings by allowing the company to offer a broad array of products and leverage vendor incentives for sales growth.

PC Connection Financial Statement Overview

Summary

Strong balance sheet strength (very low leverage and solid ROE) supports resilience, but the income statement shows weakening top-line momentum (notably a sharp TTM revenue decline) and cash flow is volatile despite generally solid free-cash-flow-to-net-income conversion.

Income Statement

Revenue has been choppy, with growth swinging from +11.7% (2021) and +8.0% (2022) to declines in 2023 (-8.8%), 2024 (-1.7%), and a sharp drop in TTM (Trailing-Twelve-Months) (-20.7%). Profitability is steady for a distributor model: gross margin improved from ~16% (2020–2021) to ~18.5% (2024 and TTM), while net margin has generally held around ~2.4%–3.1%. The main weakness is that earnings have not expanded meaningfully alongside revenue, and the recent revenue contraction increases downside risk despite stable margins.

Balance Sheet

The balance sheet is very conservatively financed, with extremely low leverage (debt-to-equity near zero in TTM and still minimal in prior years). Equity has grown meaningfully versus 2020, supporting a stronger capital base. Returns on equity have been consistently solid (~8.8%–11.6%), indicating decent profitability without relying on debt. The key drawback is that returns have not been accelerating recently, but overall financial risk from leverage appears very low.

Cash Flow

Free cash flow is generally strong relative to net income (roughly ~0.69–0.96 historically; ~0.88 in TTM), supporting earnings quality. However, cash generation is volatile year-to-year: operating cash flow was weak in 2022, surged in 2023–2024, then fell sharply in TTM (Trailing-Twelve-Months). Free cash flow growth has also swung materially (down in 2022 and 2024, then sharply higher in TTM), which suggests working-capital-driven variability and less predictability in cash conversion.

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

• Technical Analysis Sentiment: Positive
• Last Price: 58.31
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 58.31 is below the 20-day moving average (MA) of 62.61, below the 50-day MA of 59.91, and below the 200-day MA of 61.66, indicating a neutral trend. The MACD of 0.25 indicates Positive momentum. The RSI at 54.17 is Neutral, neither overbought nor oversold. The STOCH value of 59.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CNXN.

PC Connection Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNXN	74 Outperform	$1.55B	17.40	9.30%	1.02%	3.19%	-4.91%
AVT	71 Outperform	$5.11B	16.25	4.71%	2.77%	-2.30%	-29.75%
SCSC	67 Neutral	$809.17M	12.95	8.16%	―	-4.88%	2.57%
CLMB	63 Neutral	$413.27M	16.71	20.27%	0.63%	51.09%	25.86%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
ARW	60 Neutral	$7.31B	9.99	7.70%	―	3.16%	1.09%
NSIT	59 Neutral	$2.69B	16.31	9.20%	―	-6.69%	-51.74%

PC Connection Corporate Events

PC Connection boosts capital returns after Q4 performance

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 2.9% to $1.1 billion and gross profit climbed 4.5% to $135.6 million, lifting gross margin by 100 basis points to 19.3%; net income was stable at $20.7 million, with diluted EPS improving to $0.82 and adjusted diluted EPS to $0.91. Segment performance was mixed, with Business Solutions net sales up 4.2% and Enterprise Solutions up 11.9%, offset by a 36.8% drop in Public Sector Solutions sales, even as that segment posted record gross margin, and product mix shifted toward higher-margin software, which grew 24% and represented a larger share of sales. For full-year 2025, net sales increased 2.5% to $2.9 billion, gross billings grew 2.7% to $4.1 billion, gross profit rose 3.8% with margin expanding to 18.8%, while net income declined 3.9% to $83.7 million and diluted EPS slipped to $3.27, though adjusted diluted EPS improved to $3.44 and adjusted EBITDA rose 6% to $126.4 million. The company ended 2025 with $406.7 million in cash and short-term investments after repurchasing $10.7 million of stock in the fourth quarter, and on February 4, 2026 its board declared a quarterly dividend of $0.20 per share and approved a $50 million increase to the share repurchase program, bringing remaining authorization to $81.2 million, underscoring continued capital returns and confidence in its strategy to drive profitable growth in an AI-first IT landscape.

The most recent analyst rating on (CNXN) stock is a Buy with a $65.00 price target. To see the full list of analyst forecasts on PC Connection stock, see the CNXN Stock Forecast page.