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PC Connection
(NASDAQ:CNXN)
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Rating:69Neutral
Price Target:
$95.00
▲(17.88% Upside)
Action:Reiterated
Date:10/29/26
The score is driven primarily by strong balance-sheet quality and solid profitability trends, tempered by a significant near-term red flag in negative TTM cash flow. The latest earnings call was broadly positive with record results and AI-driven demand, but guidance includes a typical Q4 sequential dip and some 2027 endpoint moderation. Technicals are mixed with near-term weakness versus the 20-day average, and valuation appears reasonable but not compelling on P/E and yield.
Positive Factors
Broad-Based Revenue and Earnings Growth
Record sales and earnings growth across major product categories and customer segments indicate strong demand and effective execution. Broad-based expansion reduces reliance on a single offering, while improved operating leverage supports continued earnings growth as revenue scales.
Negative Factors
Negative Operating and Free Cash Flow
The shift to negative operating and free cash flow is a meaningful durability concern despite reported profitability. If working-capital needs remain elevated, cash conversion could constrain internally funded investment, dividends, or repurchases and increase dependence on balance-sheet liquidity.
Read all positive and negative factors
Positive Factors
Negative Factors
Broad-Based Revenue and Earnings Growth
Record sales and earnings growth across major product categories and customer segments indicate strong demand and effective execution. Broad-based expansion reduces reliance on a single offering, while improved operating leverage supports continued earnings growth as revenue scales.
Read all positive factors
PC Connection (CNXN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.16B
Dividend Yield0.88%
Average Volume (3M)157.97K
Price to Earnings (P/E)21.1
Beta (1Y)0.82
Revenue Growth3.23%
EPS Growth14.66%
CountryUS
Employees2,525
SectorTechnology
Sector Strength88
IndustryTechnology Distributors
Share Statistics
EPS (TTM)4.06
Shares Outstanding25,238,098
10 Day Avg. Volume158,283
30 Day Avg. Volume157,972
Financial Highlights & Ratios
PEG Ratio-19.43
Price to Book (P/B)1.62
Price to Sales (P/S)0.51
P/FCF Ratio25.38
Enterprise Value/Market Cap0.70
Enterprise Value/Revenue0.48
Enterprise Value/Gross Profit2.58
Enterprise Value/Ebitda10.12
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)4.18
Revenue Forecast (FY)$3.11B
PC Connection Business Overview & Revenue Model
Company Description
PC Connection, Inc., together with its affiliates, offers a comprehensive range of information technology (IT) solutions. The company structures its operations into three main divisions: Business Solutions, Enterprise Solutions, and Public Sector ...
How the Company Makes Money
Connection primarily generates revenue by selling third-party IT products and solutions to customers across its business, enterprise, and public sector segments. The largest revenue stream is product resale—such as computers and mobile devices, se...
PC Connection Earnings Call Summary
Earnings Call Date:Oct 28, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Feb 10, 2027
Earnings Call Sentiment Positive
The call was strongly positive, supported by record net sales, gross billings and gross profit, double-digit growth across major segments and verticals, improved operating leverage, record adjusted EBITDA, strong backlog and liquidity, and continued AI-related demand. Offsetting concerns included gross-margin pressure, operating cash use from working-capital investments, slower public-sector growth, an expected 3% or 4% sequential fourth-quarter decline, no anticipated budget flush, and the expectation that endpoint demand might be down slightly in 2027.Positive Updates
Record Quarterly Results
Third-quarter net sales reached a record $874.3 million, up 23.3% year-over-year; gross billings increased 19.4% to $1.3 billion; and gross profit grew 16.7% to a record $161.9 million.
Negative Updates
Gross Margin Decline
Company-wide gross margin declined 110 basis points to 18.5%, driven by customer mix, large project rollouts, a lower contribution of netted-down revenue, pricing pressures and supply chain conditions. Management said approximately half of the decline reflected software accounting and the other half reflected customer or product mix, including lower-margin endpoint devices sold to large customers.
Read all updates
Q3-2026 Updates
Positive
Negative
Record Quarterly Results
Third-quarter net sales reached a record $874.3 million, up 23.3% year-over-year; gross billings increased 19.4% to $1.3 billion; and gross profit grew 16.7% to a record $161.9 million.
Read all positive updates
Company Guidance
For Q4, Connection said it expects business to be down 3% or 4% sequentially from Q3 to Q4, with SG&A tracking that as well; the company expects to continue to outperform the U.S. IT market by 200 basis points this year. For 2027, it expects AI to continue to drive endpoint demand, but endpoint demand might be down slightly in '27 from '26, while demand for on-prem, for Agentic server, for networking, security and software will continue to be pretty solid.PC Connection Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
92
Very Positive
Cash Flow
34
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.15B | 2.87B | 2.80B | 2.85B | 3.12B | 2.89B |
| Gross Profit | 587.68M | 539.33M | 519.79M | 511.74M | 526.18M | 464.58M |
| EBITDA | 149.79M | 125.43M | 110.46M | 118.22M | 132.56M | 108.68M |
| Net Income | 102.56M | 83.72M | 87.09M | 83.27M | 89.22M | 69.91M |
Balance Sheet | ||||||
| Total Assets | 1.52B | 1.35B | 1.30B | 1.19B | 1.10B | 1.08B |
| Cash, Cash Equivalents and Short-Term Investments | 343.31M | 406.68M | 442.61M | 297.19M | 122.93M | 108.31M |
| Total Debt | 6.71M | 996.00K | 3.36M | 4.91M | 8.16M | 10.21M |
| Total Liabilities | 535.17M | 440.80M | 388.36M | 347.61M | 333.65M | 400.91M |
| Stockholders Equity | 981.13M | 910.13M | 910.99M | 840.77M | 766.17M | 682.47M |
Cash Flow | ||||||
| Free Cash Flow | -20.58M | 58.05M | 166.29M | 188.36M | 25.81M | 47.45M |
| Operating Cash Flow | -12.40M | 65.44M | 173.87M | 197.95M | 34.89M | 57.75M |
| Investing Cash Flow | -16.24M | 42.83M | -115.29M | -160.20M | -9.08M | -8.73M |
| Financing Cash Flow | -34.60M | -93.37M | -25.22M | -15.73M | -11.19M | -36.37M |
PC Connection Technical Analysis
Neutral
80.59
Price Trends
86.59
Negative
81.93
Positive
72.03
Positive
Market Momentum
-0.25
Positive
39.09
Neutral
29.73
Neutral
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 80.59 is below the 20-day moving average (MA) of 90.09, below the 50-day MA of 86.59, and above the 200-day MA of 72.03, indicating a neutral trend. The MACD of -0.25 indicates Positive momentum. The RSI at 39.09 is Neutral, neither overbought nor oversold. The STOCH value of 29.73 is Neutral, 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 |
|---|---|---|---|---|---|---|---|
76 Outperform | $780.76M | 32.18 | 19.25% | 0.41% | 24.23% | 11.21% | |
71 Outperform | $2.49B | 19.85 | 11.84% | 1.09% | 15.01% | 11.40% | |
71 Outperform | $1.20B | 15.98 | 8.66% | ― | 6.09% | 21.23% | |
69 Neutral | $2.16B | 21.09 | 10.89% | 0.88% | 3.23% | 14.66% | |
69 Neutral | $11.25B | 13.99 | 12.14% | ― | 26.05% | 76.95% | |
64 Neutral | $20.35B | 15.43 | 14.94% | 0.75% | 24.10% | 77.90% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
CNXN
PC Connection
86.83
26.54
44.02%
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208.34
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86.77%
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236.62
81.60
52.63%
CLMB
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40.64
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46.57%
PC Connection Corporate Events
Business Operations and StrategyDividendsFinancial Disclosures
PC Connection Posts Record Q3 Sales and Earnings
Positive
Oct 28, 2026
On October 28, 2026, Connection reported strong third-quarter results for the period ended September 30, 2026, posting record net sales of $874.3 million, gross billings of $1.3 billion, and gross profit of $161.9 million. Net income rose 27.2% ye...
Business Operations and StrategyExecutive/Board Changes
PC Connection Appoints New President and Chief Operating Officer
Positive
Oct 14, 2026
On October 14, 2026, PC Connection announced that Matt Zafirovski had joined the company as President and Chief Operating Officer, effective October 12, 2026, reporting to CEO Timothy McGrath, who relinquished the President title but remained Chie...
Business Operations and StrategyDividendsFinancial Disclosures
PC Connection Posts Record Q2 Results, Raises Dividend
Positive
Jul 29, 2026
On July 29, 2026, Connection reported record financial results for the second quarter ended June 30, 2026, highlighted by net sales of $854.0 million, up 12.4% year on year, and net income of $33.2 million, up 33.8%. The company’s gross marg...
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.