PC Connection, Inc. Fundamental Analysis (NASDAQ: CNXN)
PC Connection, Inc. (NASDAQ: CNXN) shows weak financial fundamentals with a PE ratio of 22.73, profit margin of 3.21%, and ROE of 10.40%. The company generates $3.0B in annual revenue with weak year-over-year growth of 2.52%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 47.3/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze CNXN's fundamental strength across five key dimensions:
Efficiency Score
WeakCNXN struggles to generate sufficient returns from assets.
Valuation Score
ExcellentCNXN trades at attractive valuation levels.
Growth Score
WeakCNXN faces weak or negative growth trends.
Financial Health Score
ExcellentCNXN maintains a strong and stable balance sheet.
Profitability Score
WeakCNXN struggles to sustain strong margins.
Key Financial Metrics
Is CNXN Expensive or Cheap?
P/E Ratio
CNXN trades at 22.73 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, CNXN's PEG of 1.61 indicates fair valuation.
Price to Book
The market values PC Connection, Inc. at 2.28 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 15.98 times EBITDA. This signals the market has high growth expectations.
How Well Does CNXN Make Money?
Net Profit Margin
For every $100 in sales, PC Connection, Inc. keeps $3.21 as profit after all expenses.
Operating Margin
Core operations generate 4.22 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $10.40 in profit for every $100 of shareholder equity.
ROA
PC Connection, Inc. generates $6.71 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
PC Connection, Inc. generates limited operating cash flow of $42.05M, signaling weaker underlying cash strength.
Free Cash Flow
PC Connection, Inc. generates weak or negative free cash flow of $34.07M, restricting financial flexibility.
FCF Per Share
Each share generates $1.35 in free cash annually.
FCF Yield
CNXN converts 1.56% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
22.73
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
1.61
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.28
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.73
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.007
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.88
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.10
vs 25 benchmark
ROA
Return on assets percentage
0.07
vs 25 benchmark
ROCE
Return on capital employed
0.13
vs 25 benchmark
How CNXN Stacks Against Its Sector Peers
| Metric | CNXN Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 22.73 | 36.46 | Better (Cheaper) |
| ROE | 10.40% | 679.00% | Weak |
| Net Margin | 3.21% | -129239.00% (disorted) | Weak |
| Debt/Equity | 0.01 | 0.43 | Strong (Low Leverage) |
| Current Ratio | 2.88 | 5.89 | Strong Liquidity |
| ROA | 6.71% | 237.00% | Weak |
CNXN outperforms its industry in 3 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews PC Connection, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
15.02%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
55.71%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
88.01%
Industry Style: Growth, Innovation, High Beta
High Growth