PC Connection (CNXN) AI Stock Analysis

• Market Cap: $1.68B
• Dividend Yield: 0.91%
• Average Volume (3M): 97.17K
• Price to Earnings (P/E): 20.0
• Beta (1Y): 0.85
• Revenue Growth: 4.21%
• EPS Growth: 6.38%
• Country: US
• Employees: 2,580
• Sector: Technology
• Sector Strength: 86
• Industry: Technology Distributors
• EPS (TTM): 0.60
• Shares Outstanding: 25,397,238
• 10 Day Avg. Volume: 126,718
• 30 Day Avg. Volume: 97,169
• PEG Ratio: 0.51
• Price to Book (P/B): 1.61
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 47.75
• Enterprise Value/Market Cap: 0.67
• Enterprise Value/Revenue: 0.10
• Enterprise Value/Gross Profit: 2.13
• Enterprise Value/Ebitda: 2.47
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

• Rating: 75 Outperform
• Price Target: $74.00 ▲(12.05%Upside)

PC Connection's strong financial performance and balanced earnings call insights are the most significant factors driving the score. While technical indicators and valuation are supportive, attention is needed on cash flow generation and market saturation risks.

PC Connection Business Overview & Revenue Model

Company Description

PC Connection, Inc. (CNXN), commonly known as Connection, is a leading provider of a wide range of information technology (IT) solutions, serving business, governmental, educational, and healthcare sectors. The company offers a comprehensive suite of services including IT procurement, technology solutions, and support services. Its core products include computer systems, software, networking products, and other peripheral equipment, which are sourced from numerous manufacturers and distributed through its multi-channel sales strategies.

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 demonstrates strong financial health with consistent revenue growth and robust profit margins. The balance sheet is solid with minimal debt, and cash flow is positive despite recent declines. However, the slowdown in revenue growth and cash flow generation poses potential challenges.

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
EBITDA	108.31M	110.49M	118.22M	132.53M	108.72M	86.67M
Net Income	87.42M	87.09M	83.27M	89.22M	69.91M	55.77M
Balance Sheet
Total Assets	1.25B	1.30B	1.19B	1.10B	1.08B	1.02B
Cash, Cash Equivalents and Short-Term Investments	340.32M	442.61M	297.19M	122.93M	108.31M	95.66M
Total Debt	1.07M	3.36M	4.91M	8.16M	6.79M	9.63M
Total Liabilities	370.53M	388.36M	347.61M	333.65M	401.69M	379.05M
Stockholders Equity	876.98M	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: Positive
• Last Price: 66.04
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• 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 66.04 is above the 20-day moving average (MA) of 65.03, above the 50-day MA of 65.40, and below the 200-day MA of 67.93, indicating a neutral trend. The MACD of 0.04 indicates Negative momentum. The RSI at 53.43 is Neutral, neither overbought nor oversold. The STOCH value of 72.12 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	75 Outperform	$1.68B	19.99	10.11%	0.91%	4.21%	6.38%
ARW	74 Outperform	$6.60B	17.52	6.68%	―	-11.13%	-43.00%
AVT	73 Outperform	$4.42B	14.76	6.42%	2.51%	-10.52%	-42.40%
NSIT	71 Outperform	$4.31B	27.02	11.37%	―	-8.73%	-35.37%
SCSC	67 Neutral	$947.89M	15.12	7.32%	―	-14.07%	-9.65%
Sector *	63 Neutral	$33.22B	5.99	-11.76%	1.91%	5.54%	-19.87%
VSH	51 Neutral	$2.16B	26.74	-3.14%	2.51%	-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.