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1. Company Snapshot

1.a. Company Description

PC Connection, Inc., together with its subsidiaries, provides various information technology (IT) solutions.The company operates through three segments: Business Solutions, Enterprise Solutions, and Public Sector Solutions.It offers IT products, including computer systems, data center solutions, software and peripheral equipment, networking communications, and other products and accessories, as well as provides services related to design, configuration, and implementation of IT solutions.


The company markets its products and services through its websites comprising connection.com, connection.com/enterprise, connection.com/publicsector, and macconnection.com.It serves small to medium-sized businesses (SMBs) that include small office/home office customers; government and educational institutions; and medium-to-large corporate accounts through outbound telemarketing and field sales, and marketing programs targeted to specific customer populations, as well as through digital, web, and print media advertising.The company was founded in 1982 and is headquartered in Merrimack, New Hampshire.

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1.b. Last Insights on CNXN

PC Connection, Inc.'s recent performance was positively driven by its Q4 2025 earnings beat, with quarterly earnings of $0.91 per share surpassing the Zacks Consensus Estimate of $0.86 per share. The company's Business Solutions and Enterprise Solutions segments reported record gross profit, which offset a decline in Public Sector Solutions. Additionally, management introduced a new operating metric, gross billings, and outlined cost actions to improve profitability. Notably, SG Americas Securities LLC recently invested in the company, purchasing a stake valued at approximately $939,000.

1.c. Company Highlights

2. Strong Q4 Earnings with Mixed Segment Performance

The company reported a 2.9% increase in gross billings to $1,060,000,000 and a 4.5% rise in gross profit to $135,600,000. The earnings per share (EPS) came in at $0.91, beating estimates of $0.86. The business solutions segment saw an 11.4% growth in gross profit, driven by a 4.7% increase in gross billings. In contrast, the public sector segment experienced a decline in net sales and gross billings due to a non-repeating project and delayed project rollouts.

Publication Date: Mar -08

📋 Highlights
  • Business Solutions Gross Profit Growth: Increased by 11.4% to $69.8M, driven by 4.7% gross billings growth to $430.3M.
  • Public Sector Decline: Net sales dropped 36.8% to $90.8M, with gross billings down 23.7% to $170.7M due to non-renewed contracts.
  • Gross Billings Expansion: Total gross billings rose 2.9% to $1.06B, with Enterprise Solutions contributing 16.1% growth to $457.8M.
  • Operating Income Growth: Operating income rose 4.2% to $23.6M, while adjusted diluted EPS increased 16.7% to $0.91.
  • 2026 Market Outlook: Expects to outperform the U.S. IT market by 200 basis points, targeting 4%-plus growth amid AI and infrastructure trends.

Segment Performance

The enterprise solutions segment delivered robust top-line growth with an 11.9% increase in net sales and a 16.1% rise in gross billings. The public sector segment, however, faced significant challenges, with a 36.8% decline in net sales and a 23.7% decrease in gross billings. As Thomas Baker noted, the public sector segment faced a $30 million headwind from a non-renewed contract.

Outlook and Guidance

The company expects to outperform the US IT market by 200 basis points in 2026, with a blended growth number of around 4%. The management is confident in its strategy, citing strong customer engagement and a loyal customer base. The company is also focused on cost management and productivity gains, with expected improvements in operating leverage.

Valuation and Metrics

With a P/E Ratio of 18.28 and an EV/EBITDA of 10.81, the company's valuation appears reasonable. The ROE of 9.37% and ROIC of 8.1% indicate a decent return on equity and invested capital. The company's guidance for 2026, combined with its disciplined approach to capital allocation, positions it well for future growth.

Cost Reduction and Restructuring

The company has taken steps to reduce costs through a voluntary retirement offering and restructuring. The expected cost savings from these initiatives are expected to improve operating leverage, with a target operating margin of around 3.789% by the end of the year.

3. NewsRoom

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PC Connection Q4 Earnings Call Highlights

Feb -06

Source: defenseworld.net

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PC Connection, Inc. (CNXN) Q4 2025 Earnings Call Transcript

Feb -05

Source: seekingalpha.com

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PC Connection (CNXN) Q4 Earnings Surpass Estimates

Feb -04

Source: zacks.com

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SG Americas Securities LLC Makes New Investment in PC Connection, Inc. $CNXN

Jan -20

Source: defenseworld.net

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PC Connection, Inc. $CNXN Shares Sold by Allspring Global Investments Holdings LLC

Jan -09

Source: defenseworld.net

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American Century Companies Inc. Sells 32,175 Shares of PC Connection, Inc. $CNXN

Dec -03

Source: defenseworld.net

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PC Connection, Inc. $CNXN Shares Sold by Geode Capital Management LLC

Nov -29

Source: defenseworld.net

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3,065 Shares in PC Connection, Inc. $CNXN Bought by Commonwealth of Pennsylvania Public School Empls Retrmt SYS

Nov -29

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.33%)

6. Segments

Enterprise Solutions

Expected Growth: 3%

PC Connection's Enterprise Solutions segment growth is driven by increasing demand for IT infrastructure, cybersecurity, and cloud services from large and mid-sized businesses. Additionally, the company's strategic partnerships with leading technology vendors, such as Cisco, HP, and Microsoft, contribute to its growth. Furthermore, the company's expertise in providing customized solutions and services to meet the unique needs of its clients also fuels its growth.

Business Solutions

Expected Growth: 1.5%

PC Connection's 1.5% growth in Business Solutions is driven by increasing demand for IT infrastructure, cybersecurity, and cloud services from small to medium-sized businesses. Additionally, the company's strategic partnerships with leading technology vendors, such as Microsoft and Cisco, have expanded its product offerings and enhanced its competitive position.

Public Sector Solutions

Expected Growth: 2.5%

Public Sector Solutions from PC Connection, Inc. growth driven by increasing government IT spending, digital transformation initiatives, and cybersecurity concerns. Strong demand for cloud-based services, data analytics, and IT infrastructure modernization also contribute to the 2.5% growth rate.

7. Detailed Products

IT Products

PC Connection, Inc. offers a wide range of IT products including desktops, laptops, tablets, smartphones, servers, storage systems, and networking equipment from top manufacturers.

Software Solutions

The company provides a variety of software solutions including operating systems, productivity software, security software, and virtualization software from leading vendors.

Cloud Services

PC Connection, Inc. offers cloud services such as infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) from top cloud providers.

IT Services

The company provides a range of IT services including consulting, implementation, and managed services to help businesses design, deploy, and manage their IT infrastructure.

Cybersecurity Solutions

PC Connection, Inc. offers a range of cybersecurity solutions including threat detection, incident response, and penetration testing to help businesses protect themselves from cyber threats.

Data Center Solutions

The company provides data center solutions including data center infrastructure, virtualization, and consolidation to help businesses optimize their data center operations.

8. PC Connection, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

PC Connection, Inc. faces moderate threat from substitutes, as customers have limited alternatives for IT products and services. However, the company's focus on providing customized solutions and strong relationships with suppliers helps mitigate this threat.

Bargaining Power Of Customers

PC Connection, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's customized solutions and strong relationships with suppliers make it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

PC Connection, Inc. has a moderate level of dependence on its suppliers, particularly for IT products. However, the company's strong relationships with suppliers and its ability to negotiate prices help mitigate this threat.

Threat Of New Entrants

The IT industry has high barriers to entry, including significant capital requirements and the need for specialized expertise. This makes it difficult for new entrants to compete with established players like PC Connection, Inc.

Intensity Of Rivalry

The IT industry is highly competitive, with many established players competing for market share. PC Connection, Inc. faces intense competition from rivals, which can lead to pricing pressure and reduced margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.58%
Debt Cost 3.95%
Equity Weight 99.42%
Equity Cost 7.35%
WACC 7.33%
Leverage 0.58%

11. Quality Control: PC Connection, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Avnet

A-Score: 5.5/10

Value: 7.3

Growth: 5.4

Quality: 3.2

Yield: 6.0

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
PC Connection

A-Score: 5.1/10

Value: 5.6

Growth: 5.7

Quality: 6.0

Yield: 2.0

Momentum: 2.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Climb Global Solutions

A-Score: 4.9/10

Value: 5.3

Growth: 8.2

Quality: 6.5

Yield: 2.0

Momentum: 3.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
ScanSource

A-Score: 4.5/10

Value: 8.0

Growth: 4.6

Quality: 5.7

Yield: 0.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
LSI Industries

A-Score: 4.5/10

Value: 4.7

Growth: 6.3

Quality: 5.9

Yield: 3.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Snap One

A-Score: 4.1/10

Value: 7.0

Growth: 6.7

Quality: 3.1

Yield: 0.0

Momentum: 6.0

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

59.86$

Current Price

59.86$

Potential

-0.00%

Expected Cash-Flows