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Pc Connection (CNXN)
NASDAQ:CNXN
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PC Connection
(NASDAQ:CNXN)
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Rating:73Outperform
Price Target:
$65.00
▲(11.47% Upside)
PC Connection's overall stock score reflects strong financial health and positive earnings call highlights, such as record gross profit and growth in key segments. However, the declining revenue trend, bearish technical indicators, and moderate valuation weigh on the score.
Positive Factors
Strong Balance Sheet
A strong balance sheet with low leverage enhances financial stability and provides flexibility for strategic investments and growth.
Record Gross Profit
Record gross profit and margin expansion indicate effective cost management and strong demand for high-margin services, supporting long-term profitability.
Growth in Key Segments
Growth in Business Solutions and Enterprise Solutions segments shows resilience and potential for future expansion in core markets.
Negative Factors
Decline in Public Sector Solutions
A significant decline in Public Sector Solutions sales could impact overall revenue growth, especially if government spending remains constrained.
Net Income Decline
A decline in net income suggests challenges in maintaining profitability, which could affect future earnings and investment capacity.
Higher SG&A Expenses
Rising SG&A expenses could pressure margins if not managed effectively, potentially impacting long-term cost efficiency and profitability.
PC Connection (CNXN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.49B
Dividend Yield1.02%
Average Volume (3M)82.44K
Price to Earnings (P/E)18.1
Beta (1Y)0.83
Revenue Growth3.19%
EPS Growth-4.91%
CountryUS
Employees2,580
SectorTechnology
Sector Strength88
IndustryTechnology Distributors
Share Statistics
EPS (TTM)0.97
Shares Outstanding25,245,224
10 Day Avg. Volume112,479
30 Day Avg. Volume82,438
Financial Highlights & Ratios
PEG Ratio4.74
Price to Book (P/B)2.00
Price to Sales (P/S)0.65
P/FCF Ratio10.96
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue0.48
Enterprise Value/Gross Profit2.59
Enterprise Value/Ebitda11.55
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
PC Connection Business Overview & Revenue Model
Company DescriptionPC 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 MoneyPC 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 Earnings Call Summary
Earnings Call Date:Oct 29, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 11, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted record gross profit and strong performance in key segments like Business Solutions, Retail, and Financial Services. However, the decline in Public Sector Solutions and net income, combined with higher SG&A expenses and the impact of the federal government shutdown, presented notable challenges.Q3-2025 Updates
Positive Updates
Record Gross Profit and Margin Expansion
Gross profit increased 2.4% year-over-year to $138.6 million, the highest in the company's history. Gross margin expanded 90 basis points to 19.6%, driven by strong growth in cloud software, cybersecurity, and services.
Strong Performance in Business Solutions
Business Solutions segment saw net sales grow 1.7% to $256.8 million, while gross profit increased 7.8% to $68 million. Gross margin reached a record 26.5%, up 150 basis points year-over-year.
Significant Growth in Retail and Financial Services
Retail saw net sales grow 25% and gross profit up 42% year-over-year. Financial services net sales were up 23% and gross profit increased 19% year-over-year.
Strong Liquidity Position
Ended the quarter with $399.2 million in cash, cash equivalents, and short-term investments, providing ample flexibility for strategic priorities and shareholder returns.
Negative Updates
Decline in Public Sector Solutions
Net sales in the Public Sector Solutions segment were $132.5 million, down 24.3% from a year ago, driven by the timing of federal projects and reduced funding at the federal, state, and local level.
Net Income Decline
Net income for the third quarter was $24.7 million compared to $27.1 million last year, a decrease of 8.6%. Diluted earnings per share were $0.97, down $0.05 year-over-year.
Higher SG&A Expenses
SG&A expenses increased 2.9% year-over-year, driven by higher personnel-related costs. As a percentage of sales, SG&A increased 80 basis points to 15.3% of net sales.
Impact of Federal Government Shutdown
Challenges in the Public Sector are exacerbated by the federal government shutdown, affecting the ability to ship orders and potentially impacting fourth-quarter results.
Company Guidance
During the Third Quarter 2025 Connection Earnings Conference Call, Connection reported a record gross profit of $138.6 million, marking a 2.4% year-over-year increase, with gross margins expanding by 90 basis points to 19.6%. Despite a 2.2% decline in total net sales to $709.1 million, attributed primarily to a 24.3% drop in Public Sector Solutions sales, segments like Business Solutions and Enterprise Solutions showed growth. Business Solutions saw a 1.7% rise in net sales to $256.8 million and a 7.8% increase in gross profit to $68 million, with gross margins reaching 26.5%. Enterprise Solutions' net sales grew by 7.7% to $319.8 million, although its gross margin slightly decreased to 14.9%. Operating income remained flat, with net income down to $24.7 million from $27.1 million the previous year. Diluted earnings per share were $0.97, consistent with adjusted EPS. The call highlighted a robust backlog and confidence in future growth, driven by strong customer engagement in AI, data center modernization, and cloud and cybersecurity solutions.PC Connection Financial Statement Overview
Summary
PC Connection maintains strong financial health with a robust balance sheet and consistent profitability. The primary concern is the declining revenue trend, which could impact future growth prospects. However, effective cost management and a strong equity position provide a solid foundation for stability.Income Statement
PC Connection demonstrates stable profitability with a consistent gross profit margin around 18% and a net profit margin of approximately 3%. However, the company faces challenges with revenue growth, showing a negative trend in recent periods, including a significant decline in the TTM period. Despite this, EBIT and EBITDA margins remain steady, indicating effective cost management.Balance Sheet
The company maintains a strong balance sheet with a very low debt-to-equity ratio, reflecting minimal leverage and financial risk. Return on equity is healthy at around 9%, showcasing efficient use of equity to generate profits. The equity ratio is robust, indicating a solid capital structure with a high proportion of assets financed by equity.Cash Flow
PC Connection's cash flow performance is mixed, with a positive free cash flow growth rate in the TTM period, but historical fluctuations. The operating cash flow to net income ratio is relatively low, suggesting potential challenges in converting income into cash. However, the free cash flow to net income ratio is strong, indicating good cash generation relative to profits.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.88B | 2.80B | 2.85B | 3.12B | 2.89B | 2.59B |
| Gross Profit | 533.50M | 519.79M | 511.74M | 526.18M | 464.58M | 418.81M |
| EBITDA | 119.86M | 110.46M | 118.22M | 132.58M | 108.68M | 86.67M |
| Net Income | 83.73M | 87.09M | 83.27M | 89.22M | 69.91M | 55.77M |
Balance Sheet | ||||||
| Total Assets | 1.31B | 1.30B | 1.19B | 1.10B | 1.08B | 1.03B |
| Cash, Cash Equivalents and Short-Term Investments | 399.20M | 442.61M | 297.19M | 122.93M | 108.31M | 95.66M |
| Total Debt | 437.00K | 3.36M | 4.91M | 8.16M | 10.21M | 13.56M |
| Total Liabilities | 402.78M | 388.36M | 347.61M | 333.65M | 400.91M | 390.58M |
| Stockholders Equity | 902.74M | 910.99M | 840.77M | 766.17M | 682.47M | 636.33M |
Cash Flow | ||||||
| Free Cash Flow | 55.71M | 166.29M | 188.36M | 25.81M | 47.45M | 25.07M |
| Operating Cash Flow | 63.27M | 173.87M | 197.95M | 34.89M | 57.75M | 36.10M |
| Investing Cash Flow | 43.71M | -115.29M | -160.20M | -9.08M | -8.73M | -11.03M |
| Financing Cash Flow | -86.65M | -25.22M | -15.73M | -11.19M | -36.37M | -19.47M |
PC Connection Technical Analysis
Neutral
58.31
Price Trends
58.62
Positive
60.44
Negative
62.24
Negative
Market Momentum
-0.22
Negative
50.43
Neutral
83.85
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNXN, the sentiment is Neutral. The current price of 58.31 is below the 20-day moving average (MA) of 58.91, below the 50-day MA of 58.62, and below the 200-day MA of 62.24, indicating a neutral trend. The MACD of -0.22 indicates Negative momentum. The RSI at 50.43 is Neutral, neither overbought nor oversold. The STOCH value of 83.85 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CNXN.
PC Connection Risk Analysis
PC Connection disclosed 28 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 |
|---|---|---|---|---|---|---|---|
73 Outperform | $1.49B | 18.15 | 9.30% | 1.02% | 3.19% | -4.91% | |
73 Outperform | $545.59M | 26.32 | 21.27% | 0.63% | 51.09% | 25.86% | |
67 Neutral | $4.04B | 18.62 | 4.71% | 2.77% | -2.30% | -29.75% | |
64 Neutral | $5.94B | 12.80 | 7.70% | ― | 3.16% | 1.09% | |
64 Neutral | $902.71M | 12.92 | 8.11% | ― | -4.88% | 2.57% | |
62 Neutral | $2.65B | 19.65 | 8.51% | ― | -6.69% | -51.74% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
CNXN
PC Connection
58.78
-11.14
-15.93%
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115.95
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49.97
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84.24
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-48.80%
SCSC
ScanSource
41.46
-8.19
-16.50%
CLMB
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122.24
-6.67
-5.17%
PC Connection Corporate Events
Business Operations and StrategyDividendsFinancial Disclosures
PC Connection Reports Q3 Financial Results, Decline in Sales
Neutral
Oct 29, 2025
On October 29, 2025, Connection reported its third-quarter financial results, revealing a 2.2% year-over-year decline in net sales to $709.1 million, while gross profit rose by 2.4% to $138.6 million. Despite a decrease in net income by 8.6% to $24.7 million, the company maintained a gross margin increase to 19.6%. The Board of Directors declared a quarterly dividend of $0.15 per share, payable on November 28, 2025. The company’s strategy focuses on data center modernization, digital workplace transformation, and supply chain innovation to drive growth and shareholder value.
The most recent analyst rating on (CNXN) stock is a Buy with a $71.00 price target. To see the full list of analyst forecasts on PC Connection stock, see the CNXN Stock Forecast page.
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.