PC Connection (CNXN) is in focus after reporting second quarter 2026 results that showed higher sales and net income compared with a year earlier, along with a declared quarterly dividend of $0.20 per share.

The latest earnings and dividend news comes after a strong run in PC Connection’s share price, with a 30 day share price return of 12.34%, a 90 day gain of 26.24%, and year to date return of 47.93%. Over a longer horizon, total shareholder return sits at 38.78% over one year and 88.19% over five years, indicating that momentum has been building rather than fading.

If PC Connection’s recent performance has you thinking about other opportunities in tech infrastructure, it may be worth scanning 55 AI infrastructure stocks for more potential ideas.

PC Connection’s business results and dividend policy paint a solid picture, and the share price has moved sharply to match. The next step is to ask whether that strength is already fully reflected in today’s valuation.

Price-to-Earnings of 22.2x: Is it justified?

On the latest figures, PC Connection trades on a P/E of 22.2x, and that valuation sits in an interesting middle ground between its peers, its industry, and an internally estimated fair level.

The P/E multiple compares PC Connection's share price with its reported earnings per share. This makes it a quick way to see how much investors are paying for current profits. For a business that reports positive net income of $95.843m and has grown earnings over both the past year and the past five years, it is a commonly watched yardstick.

Against the broader US Electronic industry, where the average P/E is 31.6x, PC Connection's 22.2x looks cheaper and suggests the stock is not priced at the very top end of sector expectations. However, relative to a peer group average P/E of 17.7x and an estimated fair P/E of 20.8x, the current multiple sits higher. This implies the market is assigning a premium to PC Connection's earnings compared with closer peers, and that the valuation could trend closer to the fair ratio level if expectations change.

Result: Price-to-Earnings of 22.2x (OVERVALUED)

However, PC Connection’s premium P/E and dependence on US$2.99b of largely US focused revenue leave the story sensitive to any slowdown in client IT spending or to tighter pricing.

Another View on PC Connection’s Valuation

The earlier P/E check suggested PC Connection looks a bit expensive relative to peers and its fair ratio. A different picture appears when using the SWS DCF model, which points to a fair value of $410.22 per share versus the current $84.14. On this view, the stock screens as heavily undervalued.

For readers who want to see how that cash flow based estimate is built line by line, Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out PC Connection for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With PC Connection showing both appealing metrics and some clear question marks, it makes sense to move quickly and test the data against your own expectations. To see the balance of potential upsides and flagged concerns in one place, take a look at the 3 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.