NasdaqGS:CNXN

Stock Analysis Report

Executive Summary

PC Connection, Inc., together with its subsidiaries, provides a range of information technology (IT) solutions.


Snowflake Analysis

Flawless balance sheet with solid track record.


Similar Companies

Share Price & News

How has PC Connection's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CNXN's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

9.5%

CNXN

9.2%

US Electronic

9.9%

US Market


1 Year Return

2.6%

CNXN

-20.1%

US Electronic

-11.9%

US Market

Return vs Industry: CNXN exceeded the US Electronic industry which returned -18% over the past year.

Return vs Market: CNXN exceeded the US Market which returned -11.5% over the past year.


Shareholder returns

CNXNIndustryMarket
7 Day9.5%9.2%9.9%
30 Day-7.4%-18.8%-15.0%
90 Day-25.3%-29.7%-21.5%
1 Year3.3%2.6%-19.3%-20.1%-10.0%-11.9%
3 Year30.2%26.4%-1.8%-4.6%12.3%5.1%
5 Year52.7%43.9%22.8%16.7%32.5%18.1%

Price Volatility Vs. Market

How volatile is PC Connection's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is PC Connection undervalued compared to its fair value and its price relative to the market?

14.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CNXN ($37.64) is trading below our estimate of fair value ($44)

Significantly Below Fair Value: CNXN is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: CNXN is good value based on its PE Ratio (12.1x) compared to the Electronic industry average (14.5x).

PE vs Market: CNXN is good value based on its PE Ratio (12.1x) compared to the US market (13x).


Price to Earnings Growth Ratio

PEG Ratio: CNXN is poor value based on its PEG Ratio (2.9x)


Price to Book Ratio

PB vs Industry: CNXN is overvalued based on its PB Ratio (1.7x) compared to the US Electronic industry average (1.5x).


Next Steps

Future Growth

How is PC Connection forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

4.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CNXN's forecast earnings growth (4.2% per year) is above the savings rate (1.7%).

Earnings vs Market: CNXN's earnings (4.2% per year) are forecast to grow slower than the US market (12.3% per year).

High Growth Earnings: CNXN's earnings are forecast to grow, but not significantly.

Revenue vs Market: CNXN's revenue (2.2% per year) is forecast to grow slower than the US market (7.3% per year).

High Growth Revenue: CNXN's revenue (2.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CNXN's Return on Equity is forecast to be low in 3 years time (12.3%).


Next Steps

Past Performance

How has PC Connection performed over the past 5 years?

13.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CNXN has high quality earnings.

Growing Profit Margin: CNXN's current net profit margins (2.9%) are higher than last year (2.4%).


Past Earnings Growth Analysis

Earnings Trend: CNXN's earnings have grown by 13% per year over the past 5 years.

Accelerating Growth: CNXN's earnings growth over the past year (27.1%) exceeds its 5-year average (13% per year).

Earnings vs Industry: CNXN earnings growth over the past year (27.1%) exceeded the Electronic industry 3.2%.


Return on Equity

High ROE: CNXN's Return on Equity (13.7%) is considered low.


Next Steps

Financial Health

How is PC Connection's financial position?


Financial Position Analysis

Short Term Liabilities: CNXN's short term assets ($776.4M) exceed its short term liabilities ($308.9M).

Long Term Liabilities: CNXN's short term assets ($776.4M) exceed its long term liabilities ($31.1M).


Debt to Equity History and Analysis

Debt Level: CNXN is debt free.

Reducing Debt: CNXN had no debt 5 years ago.

Debt Coverage: CNXN has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: CNXN has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: CNXN has a high level of physical assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if CNXN's debt is covered by short term assets.


Next Steps

Dividend

What is PC Connection's current dividend yield, its reliability and sustainability?

0.85%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: CNXN's dividend (0.85%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.98%).

High Dividend: CNXN's dividend (0.85%) is low compared to the top 25% of dividend payers in the US market (5.45%).


Stability and Growth of Payments

Stable Dividend: CNXN is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: CNXN is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of CNXN's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

18.1yrs

Average board tenure


CEO

Tim McGrath (60yo)

8.58s

Tenure

US$4,494,125

Compensation

Mr. Timothy J. McGrath, also known as Tim, has been the Chief Executive Officer of PC Connection, Inc. since August 2011 and has been its President since May 2010. Mr. McGrath served as the President and C ...


CEO Compensation Analysis

Compensation vs Market: Tim's total compensation ($USD4.49M) is above average for companies of similar size in the US market ($USD3.12M).

Compensation vs Earnings: Tim's compensation has increased by more than 20% in the past year.


Board Members

NamePositionTenureCompensationOwnership
Patricia Gallup
Co-Founder25.5yrsUS$816.38k1.81% $18.0m
David Hall
Co-Founder & Directorno dataUS$305.00k0.094% $936.0k
David Beffa-Negrini
Independent Director25.5yrsUS$205.00k0.38% $3.8m
Barbara Duckett
Independent Director10.75yrsUS$225.00k0.056% $560.0k
Jack Ferguson
Independent Director3.83yrsUS$230.00k0.32% $3.2m

18.1yrs

Average Tenure

70yo

Average Age

Experienced Board: CNXN's board of directors are seasoned and experienced ( 18.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

PC Connection, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: PC Connection, Inc.
  • Ticker: CNXN
  • Exchange: NasdaqGS
  • Founded: 1982
  • Industry: Technology Distributors
  • Sector: Tech
  • Market Cap: US$991.620m
  • Shares outstanding: 26.34m
  • Website: https://www.connection.com

Number of Employees


Location

  • PC Connection, Inc.
  • 730 Milford Road
  • Merrimack
  • New Hampshire
  • 03054-4631
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CNXNNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDMar 1998
PCCDB (Deutsche Boerse AG)YesCommon StockDEEURMar 1998

Biography

PC Connection, Inc., together with its subsidiaries, provides a range of 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, software and peripheral equipment, networking communications, and other products and accessories. The company also provides services, such as design, configuration, and implementation of IT solutions. In addition, it publishes Connected, a quarterly publication that provides informative articles on the latest technologies and industry trends; distributes specialty catalogs to education, healthcare, and government customers; and MacConnection that publishes a catalog for the Apple market. 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. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/03/29 01:22
End of Day Share Price2020/03/27 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.