PC CONNECTION INC (CNXN) Stock Fundamental Analysis
NASDAQ:CNXN - Nasdaq - US69318J1007 - Common Stock - Currency: USD
CNXN gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 125 industry peers in the Electronic Equipment, Instruments & Components industry. CNXN has an excellent financial health rating, but there are some minor concerns on its profitability. CNXN is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year CNXN was profitable.
CNXN had a positive operating cash flow in the past year.
Each year in the past 5 years CNXN has been profitable.
CNXN had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 6.70%, CNXN belongs to the best of the industry, outperforming 82.40% of the companies in the same industry.
CNXN's Return On Equity of 9.56% is fine compared to the rest of the industry. CNXN outperforms 74.40% of its industry peers.
CNXN has a Return On Invested Capital of 7.76%. This is in the better half of the industry: CNXN outperforms 77.60% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CNXN is in line with the industry average of 9.23%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.7% | ||
| ROE | 9.56% | ||
| ROIC | 7.76% |
ROA(3y)7.27%
ROA(5y)6.75%
ROE(3y)10.37%
ROE(5y)10.02%
ROIC(3y)9.38%
ROIC(5y)9.24%
1.3 Margins
The Profit Margin of CNXN (3.11%) is better than 66.40% of its industry peers.
In the last couple of years the Profit Margin of CNXN has remained more or less at the same level.
CNXN has a Operating Margin of 3.48%. This is comparable to the rest of the industry: CNXN outperforms 59.20% of its industry peers.
CNXN's Operating Margin has declined in the last couple of years.
CNXN's Gross Margin of 18.55% is on the low side compared to the rest of the industry. CNXN is outperformed by 68.80% of its industry peers.
In the last couple of years the Gross Margin of CNXN has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 3.48% | ||
| PM (TTM) | 3.11% | ||
| GM | 18.55% |
OM growth 3Y1.4%
OM growth 5Y-2.74%
PM growth 3Y8.75%
PM growth 5Y1.32%
GM growth 3Y4.92%
GM growth 5Y3%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so CNXN is still creating some value.
The number of shares outstanding for CNXN has been reduced compared to 1 year ago.
CNXN has about the same amout of shares outstanding than it did 5 years ago.
There is no outstanding debt for CNXN. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
An Altman-Z score of 6.62 indicates that CNXN is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 6.62, CNXN belongs to the top of the industry, outperforming 82.40% of the companies in the same industry.
CNXN has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 6.62 |
ROIC/WACC0.84
WACC9.26%
2.3 Liquidity
A Current Ratio of 3.14 indicates that CNXN has no problem at all paying its short term obligations.
CNXN has a Current ratio of 3.14. This is in the better half of the industry: CNXN outperforms 65.60% of its industry peers.
CNXN has a Quick Ratio of 2.89. This indicates that CNXN is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 2.89, CNXN is in the better half of the industry, outperforming 73.60% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.14 | ||
| Quick Ratio | 2.89 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 5.77% over the past year.
The Earnings Per Share has been growing slightly by 1.20% on average over the past years.
Looking at the last year, CNXN shows a decrease in Revenue. The Revenue has decreased by -1.70% in the last year.
Measured over the past years, CNXN shows a decrease in Revenue. The Revenue has been decreasing by -0.13% on average per year.
EPS 1Y (TTM)5.77%
EPS 3Y7.34%
EPS 5Y1.2%
EPS Q2Q%2%
Revenue 1Y (TTM)-1.7%
Revenue growth 3Y-1.05%
Revenue growth 5Y-0.13%
Sales Q2Q%10.92%
3.2 Future
Based on estimates for the next years, CNXN will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.39% on average per year.
CNXN is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.01% yearly.
EPS Next Y5.1%
EPS Next 2Y9.39%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year7.29%
Revenue Next 2Y6.01%
Revenue Next 3YN/A
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 19.90, the valuation of CNXN can be described as rather expensive.
Based on the Price/Earnings ratio, CNXN is valued a bit cheaper than the industry average as 72.00% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of CNXN to the average of the S&P500 Index (25.91), we can say CNXN is valued slightly cheaper.
CNXN is valuated correctly with a Price/Forward Earnings ratio of 16.68.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CNXN indicates a somewhat cheap valuation: CNXN is cheaper than 73.60% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of CNXN to the average of the S&P500 Index (21.77), we can say CNXN is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.9 | ||
| Fwd PE | 16.68 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CNXN indicates a rather cheap valuation: CNXN is cheaper than 88.80% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, CNXN is valued cheaper than 90.40% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.03 | ||
| EV/EBITDA | 8.7 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
CNXN has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)3.9
PEG (5Y)16.63
EPS Next 2Y9.39%
EPS Next 3YN/A
5. Dividend
5.1 Amount
CNXN has a yearly dividend return of 0.74%, which is pretty low.
Compared to an average industry Dividend Yield of 2.11, CNXN pays a better dividend. On top of this CNXN pays more dividend than 84.80% of the companies listed in the same industry.
With a Dividend Yield of 0.74, CNXN pays less dividend than the S&P500 average, which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.74% |
5.2 History
The dividend of CNXN has a limited annual growth rate of 4.51%.
CNXN has been paying a dividend for over 5 years, so it has already some track record.
The dividend of CNXN decreased recently.
Dividend Growth(5Y)4.51%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
12.09% of the earnings are spent on dividend by CNXN. This is a low number and sustainable payout ratio.
CNXN's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP12.09%
EPS Next 2Y9.39%
EPS Next 3YN/A
65.68
-1.21 (-1.81%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryElectronic Equipment, Instruments & Components
Earnings (Last)
Earnings (Next)
Inst Owners44.22%
Inst Owner Change-2.57%
Ins Owners27.31%
Ins Owner Change0.17%
Market Cap1.67B
Analysts43.33
Price Target77.52 (18.03%)
Short Float %2.96%
Short Ratio2.48
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.74% |
Yearly Dividend0.4
Dividend Growth(5Y)4.51%
DP12.09%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-7.77%
Min EPS beat(2)-15.03%
Max EPS beat(2)-0.5%
EPS beat(4)1
Avg EPS beat(4)-5.35%
Min EPS beat(4)-22.8%
Max EPS beat(4)16.94%
EPS beat(8)4
Avg EPS beat(8)-1.87%
EPS beat(12)7
Avg EPS beat(12)4.37%
EPS beat(16)9
Avg EPS beat(16)4.15%
Revenue beat(2)0
Avg Revenue beat(2)-2.61%
Min Revenue beat(2)-2.96%
Max Revenue beat(2)-2.26%
Revenue beat(4)1
Avg Revenue beat(4)-3.33%
Min Revenue beat(4)-10.74%
Max Revenue beat(4)2.64%
Revenue beat(8)2
Avg Revenue beat(8)-3.47%
Revenue beat(12)4
Avg Revenue beat(12)-1.77%
Revenue beat(16)8
Avg Revenue beat(16)-0.87%
PT rev (1m)0%
PT rev (3m)0%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-25.23%
EPS NY rev (1m)1.95%
EPS NY rev (3m)-2.73%
Revenue NQ rev (1m)-0.05%
Revenue NQ rev (3m)-0.14%
Revenue NY rev (1m)2.5%
Revenue NY rev (3m)1.92%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.9 | ||
| Fwd PE | 16.68 | ||
| P/S | 0.6 | ||
| P/FCF | 10.03 | ||
| P/OCF | 9.6 | ||
| P/B | 1.83 | ||
| P/tB | 2 | ||
| EV/EBITDA | 8.7 |
EPS(TTM)3.3
EY5.02%
EPS(NY)3.94
Fwd EY5.99%
FCF(TTM)6.55
FCFY9.97%
OCF(TTM)6.85
OCFY10.42%
SpS110.32
BVpS35.87
TBVpS32.88
PEG (NY)3.9
PEG (5Y)16.63
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.7% | ||
| ROE | 9.56% | ||
| ROCE | 10.5% | ||
| ROIC | 7.76% | ||
| ROICexc | 14.83% | ||
| ROICexgc | 17.58% | ||
| OM | 3.48% | ||
| PM (TTM) | 3.11% | ||
| GM | 18.55% | ||
| FCFM | 5.93% |
ROA(3y)7.27%
ROA(5y)6.75%
ROE(3y)10.37%
ROE(5y)10.02%
ROIC(3y)9.38%
ROIC(5y)9.24%
ROICexc(3y)14.03%
ROICexc(5y)12.66%
ROICexgc(3y)16.27%
ROICexgc(5y)14.67%
ROCE(3y)12.69%
ROCE(5y)12.51%
ROICexcg growth 3Y8.7%
ROICexcg growth 5Y-0.74%
ROICexc growth 3Y7.7%
ROICexc growth 5Y-0.84%
OM growth 3Y1.4%
OM growth 5Y-2.74%
PM growth 3Y8.75%
PM growth 5Y1.32%
GM growth 3Y4.92%
GM growth 5Y3%
F-Score6
Asset Turnover2.16
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 58.34% | ||
| Cap/Sales | 0.27% | ||
| Interest Coverage | 16246.2 | ||
| Cash Conversion | 157.4% | ||
| Profit Quality | 190.93% | ||
| Current Ratio | 3.14 | ||
| Quick Ratio | 2.89 | ||
| Altman-Z | 6.62 |
F-Score6
WACC9.26%
ROIC/WACC0.84
Cap/Depr(3y)69.99%
Cap/Depr(5y)75.1%
Cap/Sales(3y)0.3%
Cap/Sales(5y)0.34%
Profit Quality(3y)148.69%
Profit Quality(5y)111.78%
High Growth Momentum
Growth
EPS 1Y (TTM)5.77%
EPS 3Y7.34%
EPS 5Y1.2%
EPS Q2Q%2%
EPS Next Y5.1%
EPS Next 2Y9.39%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue 1Y (TTM)-1.7%
Revenue growth 3Y-1.05%
Revenue growth 5Y-0.13%
Sales Q2Q%10.92%
Revenue Next Year7.29%
Revenue Next 2Y6.01%
Revenue Next 3YN/A
Revenue Next 5YN/A
EBIT growth 1Y-7.82%
EBIT growth 3Y0.34%
EBIT growth 5Y-2.86%
EBIT Next Year12.19%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y-11.71%
FCF growth 3Y51.9%
FCF growth 5Y72.33%
OCF growth 1Y-12.17%
OCF growth 3Y44.4%
OCF growth 5Y36.57%