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PC Connection (CNXN)
NASDAQ:CNXN
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PC Connection
(NASDAQ:CNXN)
73Outperform
PC Connection (CNXN) vs. S&P 500 (SPY)
Market Cap
$1.77B
Dividend Yield0.65%
Average Volume (3M)105.07K
Price to Earnings (P/E)21.1
Beta (1Y)0.84
Revenue Growth4.21%
EPS Growth6.38%
CountryUS
Employees2,580
SectorTechnology
Sector Strength76
IndustryTechnology Distributors
Share Statistics
EPS (TTM)0.60
Shares Outstanding25,397,238
10 Day Avg. Volume89,554
30 Day Avg. Volume105,069
Financial Highlights & Ratios
PEG Ratio34.06
Price to Book (P/B)2.05
Price to Sales (P/S)0.00
P/FCF Ratio31.01
Enterprise Value/Market Cap0.89
Enterprise Value/Revenue0.14
Enterprise Value/Gross Profit2.99
Enterprise Value/Ebitda3.48
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
PC Connection Business Overview & Revenue Model
Company DescriptionPC Connection, Inc. (CNXN), also known as Connection, is a leading information technology solutions provider operating primarily in the United States. The company serves a diverse range of markets, including small- to medium-sized businesses, large enterprises, and government and educational institutions. PC Connection offers a comprehensive portfolio of IT products and services, including computing devices, software, networking solutions, data center solutions, and professional services. The company is renowned for its customer-centric approach, providing tailored solutions to meet specific business needs across various sectors.
How the Company Makes MoneyPC Connection generates revenue through the sale of a wide array of IT products and services. The company's primary revenue streams include the sale of computer systems, software, and peripheral equipment. Additionally, PC Connection earns from offering professional services such as consulting, design, installation, and support services. Significant partnerships with leading technology manufacturers, such as Apple, Microsoft, and Cisco, contribute to its earnings by enabling access to the latest technology solutions. The company's revenue model is enhanced by its ability to provide customized IT solutions, effectively addressing the unique requirements of its diverse customer base across multiple industries.
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.85
Very Positive
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.80
Positive
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.75
Positive
| 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
Positive
69.70
Price Trends
63.10
Positive
65.59
Positive
68.50
Positive
Market Momentum
2.26
Negative
67.29
Neutral
71.75
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 69.7 is above the 20-day moving average (MA) of 65.71, above the 50-day MA of 63.10, and above the 200-day MA of 68.50, indicating a bullish trend. The MACD of 2.26 indicates Negative momentum. The RSI at 67.29 is Neutral, neither overbought nor oversold. The STOCH value of 71.75 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 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
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $1.77B | 21.10 | 10.11% | 0.65% | 4.21% | 6.38% | |
71 Outperform | $6.32B | 16.78 | 6.68% | ― | -11.13% | -43.00% | |
70 Outperform | $4.35B | 14.55 | 6.42% | 2.50% | -10.52% | -42.40% | |
68 Neutral | $4.38B | 27.43 | 11.37% | ― | -8.73% | -35.37% | |
67 Neutral | $921.67M | 14.70 | 7.32% | ― | -14.07% | -9.65% | |
60 Neutral | $11.59B | 10.39 | -7.23% | 2.94% | 7.46% | -10.76% | |
58 Neutral | $2.07B | 26.74 | -3.14% | 2.62% | -11.31% | -127.88% |
* Technology Sector Average
Performance Comparison
CNXN
PC Connection
69.70
1.49
2.18%
ARW
Arrow Electronics
121.93
-11.05
-8.31%
AVT
Avnet
51.88
-0.55
-1.05%
NSIT
Insight Enterprises
137.08
-72.01
-34.44%
SCSC
ScanSource
40.79
-8.07
-16.52%
VSH
Vishay Intertechnology
15.27
-8.24
-35.05%
PC Connection Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 12.58%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were strong revenue growth and positive developments in certain segments and markets, there were also challenges such as declining gross margins and operational cash flow issues. The company showed resilience and strategic initiatives to manage these challenges, but the presence of significant lowlights alongside the highlights results in a balanced outlook.Q1-2025 Updates
Positive Updates
Revenue Growth
Consolidated net sales increased by 10.9% to $701 million in the first quarter of fiscal year 2025.
Public Sector Sales Increase
Public Sector Solutions net sales increased by 54.7% year-over-year, with significant contributions from federal government sales.
Adjusted Earnings Per Share
Adjusted diluted earnings per share increased by 20% to $0.60 compared to Q1 2024.
Share Buyback Program
The company repurchased 697,000 shares, reducing outstanding shares by 2.7% and announced an additional $50 million for share repurchases.
Vertical Market Success
Financial Services net sales increased by 32% and healthcare net sales grew by 13% year-over-year.
Negative Updates
Gross Margin Decline
Gross margins decreased slightly to 18.2%, down 50 basis points from the previous year.
Operating Income Challenges
Operating income as a percentage of sales remained flat at 2.1% year-over-year, and gross margin for the Enterprise segment decreased by 90 basis points.
Cash Flow Issues
Cash flow used in operations was $52.4 million, primarily due to an increase in inventory and a decrease in accounts payable.
Interest Income Decrease
Interest income decreased by $664,000 compared to the previous year.
Company Guidance
During the first quarter of fiscal year 2025, Connection reported consolidated net sales of $701 million, marking a 10.9% increase compared to the same period in 2024. Gross profit rose by nearly 8% to $127.3 million, although gross margins slightly decreased to 18.2%. Operating income reached $14.5 million, reflecting a 7.9% growth, with operating income excluding severance expenses up by 29.6% to $17.5 million. Net income was $13.5 million, a 2.5% rise from the previous year, and diluted earnings per share increased by 2% to $0.51, while adjusted diluted earnings per share surged by 20% to $0.60. Notebooks and desktops net sales saw a significant uptick of 21% year-over-year. Despite a dynamic macroeconomic environment, including tariff concerns, Connection maintained its momentum in advanced technologies and integrated solutions, with a 7% increase in revenue driven by software and server storage solutions. The company also noted its highest backlog in nearly two years and projected to outperform the U.S. IT market growth by 200 basis points for the year.PC Connection Corporate Events
Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
PC Connection Approves Key Proposals at Annual Meeting
Neutral
May 14, 2025
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.
Spark’s Take on CNXN Stock
According to Spark, TipRanks’ AI Analyst, CNXN is a Outperform.
PC Connection’s stock is supported by strong financial fundamentals and a stable balance sheet, though technical indicators suggest caution due to potential overbought conditions. The valuation is fair, indicating no significant risk of overvaluation. While the earnings call highlighted both challenges and strengths, the company’s strategic initiatives and sector growth provide optimism for future performance. The absence of impactful corporate events means the overall score reflects internal performance and market conditions.
To see Spark’s full report on CNXN stock, click here.
Stock BuybackDividendsFinancial Disclosures
PC Connection Reports Strong Q1 2025 Financial Results
Positive
Apr 30, 2025
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.
Spark’s Take on CNXN Stock
According to Spark, TipRanks’ AI Analyst, CNXN is a Neutral.
PC Connection’s stock is supported by strong financial fundamentals and a stable balance sheet, though technical indicators suggest bearish momentum. Valuation appears fair with a reasonable P/E ratio, and while the earnings call highlights challenges, it also provides optimism for future growth. The absence of impactful corporate events means the overall score reflects internal performance and market conditions.
To see Spark’s full report on CNXN stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.