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PC Connection (CNXN) AI Stock Analysis

CNXN

PC Connection

(NASDAQ:CNXN)

Select Model
Rating:69Neutral
Price Target:$95.00▲(9.41% Upside)
Action:downgraded
Date:10/29/26

The score is primarily supported by strong earnings performance and an exceptionally conservative balance sheet. Negative operating and free cash flow is the largest risk, while moderate valuation, mixed technical momentum, margin pressure, and softer near-term guidance limit the upside.

Positive Factors
Broad-Based Revenue and Earnings GrowthRecord 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 FlowThe 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.

PC Connection (CNXN) vs. SPDR S&P 500 ETF (SPY)

-10%0%10%20%30%40%50%60%70%CNXN+49.99%SPY+11.79%Dec '25Jan '26Feb '26Mar '26Apr '26May '26Jun '26Jul '26Aug '26Sep '26Oct '26
Market Cap
$2.19B
Dividend Yield
0.86%
Average Volume (3M)
152.17K
Price to Earnings (P/E)
21.4
Beta (1Y)
0.83
Revenue Growth
9.53%
EPS Growth
24.84%
Country
US
Employees
2,525
Sector
Technology
Sector Strength
61
Industry
Technology Distributors

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 Sol...

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, serve...

PC Connection Earnings Call Summary

Earnings Call Date:Oct 27, 2026(Q3-2026)|% Change Since:0.38%|Next Earnings Date:Feb 09, 2027
Earnings Call SentimentPositive

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.

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

Strong revenue and earnings growth and an exceptionally strong, low-debt balance sheet are offset by negative trailing operating and free cash flow. The score reflects the average of the provided income statement, balance sheet, and cash flow scores.

Income Statement

82Very Positive

Balance Sheet

95Very Positive

Cash Flow

35Negative
Financial statement breakdown
BreakdownTTMDec 2025Dec 2024Dec 2023Dec 2022Dec 2021
Income Statement
Total Revenue3.15B2.87B2.80B2.85B3.12B2.89B
Gross Profit587.68M539.33M519.79M511.74M526.18M464.58M
EBITDA149.79M125.43M110.46M118.22M132.56M108.68M
Net Income102.56M83.72M87.09M83.27M89.22M69.91M
Balance Sheet
Total Assets1.52B1.35B1.30B1.19B1.10B1.08B
Cash, Cash Equivalents and Short-Term Investments343.31M406.68M442.61M297.19M122.93M108.31M
Total Debt6.71M996.00K3.36M4.91M8.16M10.21M
Total Liabilities535.17M440.80M388.36M347.61M333.65M400.91M
Stockholders Equity981.13M910.13M910.99M840.77M766.17M682.47M
Cash Flow
Free Cash Flow-20.58M58.05M166.29M188.36M25.81M47.45M
Operating Cash Flow-12.40M65.44M173.87M197.95M34.89M57.75M
Investing Cash Flow-16.24M42.83M-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

Technical Analysis SentimentPositive
Last Price86.83

Price Trends

50DMA86.77Positive
100DMA82.07Positive
200DMA72.17Positive

Market Momentum

MACD-0.34Positive
RSI44.29Neutral
STOCH31.36Neutral

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 86.83 is below the 20-day moving average (MA) of 89.81, above the 50-day MA of 86.77, and above the 200-day MA of 72.17, indicating a neutral trend. The MACD of -0.34 indicates Positive momentum. The RSI at 44.29 is Neutral, neither overbought nor oversold. The STOCH value of 31.36 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.

Higher RiskSector Avg.Lower RiskFinance & CorporateTech & InnovationLegal & RegulatoryProductionAbility to SellMacro & Political
Tech & Innovation - Risks related to the company’s reliance on technology and ability to make innovative products

Latest Risks Added

1 New Risk
1.In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial position, and results of operations. Risk factors which could cause actual results to differ materially from those suggested by forward-looking statements include but are not limited to those discussed or identified in this document, in our other public filings with the SEC, and those contained in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.Q2, 2026

PC Connection Peers Comparison

Overall Rating

UnderperformOutperform
Sector (61)

Financial Indicators

CNXN against its peers
NameOverall RatingMarket CapP/E RatioROEDividend YieldRevenue GrowthEPS Growth
CLMBCLMB78Outperform$758.26M31.2619.25%0.42%24.23%10.53%
SNXSNX75Outperform$18.88B14.3114.94%0.81%24.10%77.90%
ARWARW74Outperform$10.61B13.1912.14%―26.05%76.95%
PLUSPLUS71Outperform$2.42B19.3211.84%1.12%15.01%11.40%
SCSCSCSC71Outperform$1.18B15.648.66%―6.09%21.23%
CNXNCNXN69Neutral$2.19B21.3910.89%0.86%9.53%24.84%
Sector *61Neutral$37.18B12.37-10.20%1.83%8.50%-7.62%

* Technology Sector Average

Performance Comparison

0%50%100%CNXNARWPLUSSCSCSNXCLMBDec '25Jan '26Feb '26Mar '26Apr '26May '26Jun '26Jul '26Aug '26Sep '26Oct '26
CNXN and its peers over the selected period
Show on chartTickerCompany NamePriceChange% Change
CNXNPc Connection86.8327.8147.13%
ARWArrow Electronics, Inc.208.3496.8986.94%
PLUSEplus Inc92.9120.9429.10%
SCSCScanSource Inc57.7115.4336.49%
SNXTD SYNNEX Corporation236.6284.7455.79%
CLMBClimb Global Solutions, Inc.40.6411.4439.19%

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% year...

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 Chief E...

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 margin...

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.

Date of analysis: Oct 29, 2026