PC Connection (CNXN) has been in focus after reporting quarterly revenue of US$709.1 million, a 2.2% year-on-year decline that missed analyst revenue and EPS estimates, with the stock down about 4% since the release.

At a share price of US$58.78, the recent 4% pullback after the results comes on top of a 1-year total shareholder return decline of 15.38%. However, the 3-year and 5-year total shareholder returns of 20.17% and 20.41% present a more constructive longer term picture and suggest that momentum has faded recently as the market reassesses the company after weaker quarterly numbers.

If earnings misses have you reassessing your watchlist, it could be a useful moment to compare PC Connection with other high growth tech and AI stocks that are catching investor attention.

With PC Connection trading at US$58.78 and sitting at a discount to both some valuation models and analyst targets, investors may be asking whether this pullback represents a potential opportunity or whether the market is already accounting for its future growth.

Most Popular Narrative: 22.7% Undervalued

With PC Connection last closing at US$58.78 against a narrative fair value of US$76, the gap reflects a view that future earnings power is not fully reflected in the current price.

Ongoing shift in customer demand from commodity hardware toward integrated IT solutions and managed services, alongside PC Connection's investment in technical capabilities, enhances customer retention and supports a transition to higher-margin, recurring revenue streams, likely improving net margins over time.

Curious what kind of revenue build, margin uplift and earnings multiple are baked into that valuation gap? The narrative leans on steady top line growth, firmer profitability and a specific future P/E level to bridge today’s price to that higher fair value. The exact mix of growth, margins and discount rate is where the story gets interesting.

Result: Fair Value of $76 (UNDERVALUED)

However, the story could change quickly if hardware resales continue to pressure margins or if public sector weakness turns into a more persistent drag on revenue.

Build Your Own PC Connection Narrative

If you see the assumptions differently or prefer to weigh the data on your own terms, you can build a custom PC Connection story in just a few minutes, starting with Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding PC Connection.

Ready To Hunt For More Investment Ideas?

If PC Connection is on your radar, do not stop there. Use this moment to widen your list and spot other names that might fit your style.

• Target potential mispricings by scanning these 882 undervalued stocks based on cash flows that may be trading below what their cash flows imply.
• Ride the AI wave by checking out these 25 AI penny stocks that are tying their growth to real-world artificial intelligence use cases.
• Boost your income focus by reviewing these 13 dividend stocks with yields > 3% that offer yields above 3% while still passing basic quality checks.

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.