PC Connection (NASDAQ:CNXN) Issues Earnings Results

Key Points

• PC Connection delivered record results: Revenue rose 12.4% year over year to $854 million, beating estimates by nearly $89 million, while EPS of $1.31 exceeded consensus by $0.31. Operating income increased 39.2% to $43 million.
• Growth was broad-based across notebooks, mobility, desktops, software and networking, supported by demand for data-center modernization, cybersecurity, cloud and AI infrastructure. Management expects to outperform the U.S. IT market by approximately 200 basis points in 2026.
• Near-term risks include slower sequential sales and weak cash flow: Third-quarter revenue is expected to decline sequentially due to seasonality and pulled-forward purchases, while first-half operating cash flow was negative $49.5 million as inventory and receivables rose.

PC Connection (NASDAQ:CNXN - Get Free Report) posted its quarterly earnings data on Wednesday. The company reported $1.31 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.00 by $0.31, FiscalAI reports. The firm had revenue of $854.00 million during the quarter, compared to analysts' expectations of $764.79 million. PC Connection had a return on equity of 10.17% and a net margin of 3.02%.

Here are the key takeaways from PC Connection's conference call:

• Connection reported record net sales of $854 million, up 12.4% year over year, with gross profit rising 14.3% to $157.5 million and operating income increasing 39.2% to a record $43 million. Diluted EPS grew 35.1% to $1.31.
• Growth was broad-based, including a 19.5% increase in notebooks, mobility and desktops, 15% software growth, and 11.5% networking growth. Business Solutions and Enterprise Solutions posted double-digit sales growth and both ended the quarter with elevated or record backlogs.
• Management said customer investment remains strong in data-center modernization, cybersecurity, cloud, AI-ready endpoints and enterprise AI infrastructure, and expects to outperform the U.S. IT market by approximately 200 basis points in 2026.
• Management expects third-quarter revenue to decline sequentially and grow at a high-single-digit rate year over year, partly due to Microsoft’s June year-end, typical seasonal patterns, and purchases pulled forward ahead of potential price increases. Some supply-chain-related backlog may not be fulfilled until the fourth quarter.
• First-half operating cash flow was negative $49.5 million as inventory increased by $61.5 million and accounts receivable rose by $80.6 million. Management expects inventory to decline somewhat by year-end, but receivables may remain elevated if current business levels persist.

PC Connection Trading Down 0.2%

CNXN traded down $0.13 during trading on Wednesday, hitting $82.97. 136,326 shares of the company's stock traded hands, compared to its average volume of 103,223. PC Connection has a 12-month low of $54.97 and a 12-month high of $84.81. The stock has a market capitalization of $2.09 billion, a price-to-earnings ratio of 24.12, a PEG ratio of 2.07 and a beta of 0.88. The company's 50 day simple moving average is $73.15 and its two-hundred day simple moving average is $65.46.

Wall Street Analyst Weigh In

A number of research analysts have recently issued reports on the company. Weiss Ratings raised PC Connection from a "hold (c+)" rating to a "buy (b-)" rating in a research note on Wednesday, June 3rd. Wall Street Zen upgraded shares of PC Connection from a "hold" rating to a "buy" rating in a report on Saturday, May 2nd. One analyst has rated the stock with a Buy rating and one has issued a Hold rating to the company. Based on data from MarketBeat, the stock currently has an average rating of "Moderate Buy".

Insider Activity at PC Connection

In related news, Chairman Patricia Gallup sold 7,142 shares of PC Connection stock in a transaction on Monday, July 6th. The stock was sold at an average price of $72.86, for a total value of $520,366.12. Following the completion of the sale, the chairman owned 7,006,321 shares of the company's stock, valued at $510,480,548.06. The trade was a 0.10% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is available at this link. Insiders have sold 28,592 shares of company stock valued at $2,048,512 in the last three months. Insiders own 56.60% of the company's stock.

Institutional Inflows and Outflows

Several institutional investors have recently added to or reduced their stakes in the business. Invesco Ltd. raised its holdings in PC Connection by 22.1% in the 4th quarter. Invesco Ltd. now owns 219,220 shares of the company's stock worth $12,662,000 after purchasing an additional 39,716 shares during the period. Vident Advisory LLC grew its holdings in PC Connection by 10.1% during the 4th quarter. Vident Advisory LLC now owns 9,782 shares of the company's stock valued at $565,000 after buying an additional 901 shares in the last quarter. Verdad Advisers LP bought a new stake in PC Connection in the 4th quarter valued at $473,000. Numerai GP LLC bought a new stake in shares of PC Connection in the fourth quarter worth about $1,692,000. Finally, Guggenheim Capital LLC bought a new stake in PC Connection in the 4th quarter worth approximately $254,000. 42.85% of the stock is currently owned by institutional investors.

PC Connection Company Profile

PC Connection, Inc NASDAQ: CNXN, now operating under the trade name Connection, is a value-added provider of information technology solutions founded in 1982 and headquartered in Merrimack, New Hampshire. The company offers a broad portfolio of hardware and software products sourced from leading technology vendors, alongside professional services designed to help organizations design, deploy and maintain IT environments.

Connection's product offerings encompass desktop and notebook computers, servers and storage systems, networking and cybersecurity solutions, as well as cloud and virtualization technologies.

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