Technology solutions provider PC Connection presents investors with a complex investment case following its second-quarter 2025 results. While the company reported modest revenue growth, shrinking profitability metrics raise questions about its ability to maintain momentum in a competitive hardware market.
Financial Performance: A Tale of Two Metrics
The New Hampshire-based firm posted $759.7 million in net sales for Q2 2025, marking a 3.2% year-over-year increase. This growth stemmed primarily from data center modernization projects and enterprise transitions to Windows 11 systems. Gross profit saw marginal improvement, rising 0.9% to $137.8 million.
However, beneath these positive figures lurk concerning trends:
- Net income declined 5.2% to $24.8 million
- Gross margin contracted by 40 basis points to 18.1%
- Earnings per share remained flat at $0.97
Segment performance revealed stark contrasts:
- Business Solutions Division: Revenue climbed 5.4% to $293.2 million with gross profit up 3.8% ($68.8 million)
- Public Sector Unit: Sales plummeted 11.9%, reflecting weakening government demand
Shareholder Returns Defy Operational Challenges
Despite these headwinds, management continues returning capital to investors through:
Should investors sell immediately? Or is it worth buying PC Connection?
- A quarterly dividend of $0.15 per share payable August 29
- Substantial share repurchases totaling $106.11 million (1.83 million shares) during the quarter
This aggressive buyback program represents approximately 4% of outstanding shares at current valuations.
Technical Indicators Flash Caution Signals
Market technicians observe multiple warning signs in PC Connection’s stock performance:
- 19 out of 26 technical indicators turned bearish as of August 14
- The emergence of a KDJ death cross and bearish marubozu pattern suggests continued downward momentum
- Shares currently trade between $62.37 and $63.59, slightly above the 52-week low of $56.72 hit August 8
- Weekly and monthly losses stand at 3.35% and 3.04% respectively (through July 31)
Notably, trading volumes exceeded 208,000 shares during recent sell-offs, indicating heightened investor anxiety. Market participants now watch closely to determine whether current levels represent a consolidation phase or the beginning of a sustained downtrend.
The coming quarters will prove critical for PC Connection as it balances growth initiatives against margin preservation in an increasingly price-sensitive technology hardware environment.
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