Technical Analysis
ADX at 10.25 signals no meaningful trend, implying price action likely stays rangebound until directional strength emerges. DI+ declining indicates bearish directional pressure on momentum, while DI- showing a peak-and-reversal signals a bullish counter-pressure; the combination points to balanced directional forces rather than a sustained trend.
MACD sits negative at -0.42 and moves lower, with the MACD line below its -0.20 signal line; that configuration denotes bearish momentum and reduces the probability of a swift, sustained breakout to the upside until MACD begins to rise or crosses above the signal line.
MRO reads -20.19 with a dip-and-reversal, which places the market price below the internal target implied by momentum regression and suggests potential mean-reversion upside pressure toward fair value if selling ebbs.
RSI at 47.33 and decreasing shows weakening short-term momentum without oversold conditions; this leaves room for either a consolidation near current levels or a modest rebound if buyers reassert themselves.
Price sits below the 200-day average ($65.18) and beneath short-term EMAs (12-day EMA $62.50, 26-day EMA $63.00) while the 20-day average ($62.81) also exceeds the close ($61.61). Short-term averages trending down and the super trend upper band at $64.76 act as overhead resistance; small proximity to the lower Bollinger band suggests limited near-term downside before mean reversion attempts.
Recent volatility shows a higher 42-day beta (1.56) than 52-week beta (0.75), indicating amplified recent sensitivity to market moves; trading volume sits below short- and long-term averages, implying any momentum shift may require catalytic volume to sustain direction.
Fundamental Analysis
Connection recorded total revenue of $759,693,000 and gross profit of $137,766,000 for the period ending 2025-06-30, with gross margin at 18.13% and operating (EBIT) margin at 4.06%. The company generated EBIT of $30,866,000 and EBITDA of $33,766,000, supporting positive operating leverage despite margin compression year-over-year. The board declared a quarterly dividend of $0.15 per share and continues returning capital to shareholders.
EPS came in at $0.97 versus an estimate of $0.91, producing an EPS surprise of roughly 6.6%, and net income reached $24,789,000. Operating cash flow and free cash flow remained positive ($26,258,000 and $24,638,000 respectively) with free cash flow yield at about 1.52%, supporting the company’s ability to fund dividends and share repurchases.
QoQ and YoY movements present mixed signals: EBIT margin improved QoQ by 63.57% yet declined YoY by 4.51%, reflecting short-cycle margin recovery versus prior-year comparisons. Revenue growth registered as 8.37% on the primary growth metric available, though YoY revenue comparisons show weakness in other provided measures; operating margin QoQ rose by 63.57% while operating margin YoY fell by 4.51%—that dynamic implies recent operational improvements after earlier pressure.
Balance-sheet strength stands out: current ratio at 3.09 and quick ratio at 2.73 indicate ample near-term liquidity. Cash and short-term investments totaled $346,094,000 with minimal total debt ($634,000), producing a debt-to-equity ratio near zero and high cash coverage metrics. Cash conversion cycle sits at about 51.3 days with receivables and payables contributing to working-capital dynamics; net working capital remains sizeable at $770,791,000.
Returns lie below typical sector averages: return on assets at 1.97% and return on equity at 2.80%. EBIT margin at 4.06% falls below the industry peer mean of 27.08% and below the industry peer median of 29.99%, while asset turnover of 0.60 exceeds the industry peer mean of 0.258, showing efficient revenue generation from assets despite lower margin structure. Free cash flow yield at 1.52% sits above the industry peer mean of 0.94%, reinforcing a cash-centric valuation argument. Use of capital remains conservative, with capital expenditures small relative to depreciation.
Valuation: The current valuation as determined by WMDST reads under-valued. Market multiples show P/B at about 1.84x and P/E near 67.5x, while enterprise multiple sits at 37.86; those multiples reflect modest market capitalization relative to reported earnings and enterprise metrics. Given positive free cash generation and a strong liquidity position, the valuation determination reflects the balance between low returns on capital and robust cash metrics.
MOST-RECENT QUARTERLY REPORT
| REPORT PERIOD ENDING: | 2025-06-30 |
| REPORT DATE: | 2025-07-30 |
| NEXT REPORT DATE: | 2025-10-29 |
| CASH FLOW | Begin Period Cash Flow | $ 182.5 M |
| Operating Cash Flow | $ 26.3 M | |
| Capital Expenditures | $ -1.62 M | |
| Change In Working Capital | $ -2.90 M | |
| Dividends Paid | $ -3.81 M | |
| Cash Flow Delta | $ 4.3 M | |
| End Period Cash Flow | $ 186.7 M | |
| INCOME STATEMENT | REVENUE | |
| Total Revenue | $ 759.7 M | |
| Forward Revenue | $ 183.9 M | |
| COSTS | ||
| Cost Of Revenue | $ 621.9 M | |
| Depreciation | $ 2.9 M | |
| Depreciation and Amortization | $ 2.9 M | |
| Research and Development | — | |
| Total Operating Expenses | $ 728.8 M | |
| PROFITABILITY | ||
| Gross Profit | $ 137.8 M | |
| EBITDA | $ 33.8 M | |
| EBIT | $ 30.9 M | |
| Operating Income | $ 30.9 M | |
| Interest Income | $ 3.2 M | |
| Interest Expense | — | |
| Net Interest Income | $ 3.2 M | |
| Income Before Tax | $ 34.1 M | |
| Tax Provision | $ 9.3 M | |
| Tax Rate | 27.3 % | |
| Net Income | $ 24.8 M | |
| Net Income From Continuing Operations | $ 24.8 M | |
| EARNINGS | ||
| EPS Estimate | $ 0.91 | |
| EPS Actual | $ 0.97 | |
| EPS Difference | $ 0.06 | |
| EPS Surprise | 6.593 % | |
| Forward EPS | $ 0.94 | |
| BALANCE SHEET | ASSETS | |
| Total Assets | $ 1.3 B | |
| Intangible Assets | $ 75.2 M | |
| Net Tangible Assets | $ 809.6 M | |
| Total Current Assets | $ 1.1 B | |
| Cash and Short-Term Investments | $ 346.1 M | |
| Cash | $ 186.7 M | |
| Net Receivables | $ 637.0 M | |
| Inventory | $ 133.5 M | |
| Long-Term Investments | $ 4.5 M | |
| LIABILITIES | ||
| Accounts Payable | $ 303.8 M | |
| Short-Term Debt | — | |
| Total Current Liabilities | $ 368.3 M | |
| Net Debt | — | |
| Total Debt | $ 634.0 K | |
| Total Liabilities | $ 384.5 M | |
| EQUITY | ||
| Total Equity | $ 884.8 M | |
| Retained Earnings | $ 868.0 M | |
| VALUATION & PER-SHARE METRICS | EQUITY & PER-SHARE METRICS | |
| Book Value Per-Share | $ 34.84 | |
| Shares Outstanding | 25.396 M | |
| Revenue Per-Share | $ 29.91 | |
| VALUATION | Market Capitalization | $ 1.6 B |
| Enterprise Value | $ 1.3 B | |
| Enterprise Multiple | 37.855 | |
| Enterprise Multiple QoQ | -40.277 % | |
| Enterprise Multiple YoY | -1.549 % | |
| Enterprise Multiple IPRWA | high: 259.951 median: 105.485 mean: 94.103 CNXN: 37.855 low: -171.742 |
|
| EV/R | 1.683 | |
| CAPITAL STRUCTURE | ||
| Asset To Equity | 1.435 | |
| Asset To Liability | 3.301 | |
| Debt To Capital | 0.001 | |
| Debt To Assets | 0.001 | |
| Debt To Assets QoQ | -41.176 % | |
| Debt To Assets YoY | -67.32 % | |
| Debt To Assets IPRWA | high: 0.807 median: 0.307 mean: 0.299 low: 0.002 CNXN: 0.001 |
|
| Debt To Equity | 0.001 | |
| Debt To Equity QoQ | -40.984 % | |
| Debt To Equity YoY | -67.857 % | |
| Debt To Equity IPRWA | high: 2.299 median: 1.545 mean: 1.302 CNXN: 0.001 low: -1.33 |
|
| PRICE-BASED VALUATION | ||
| Price To Book (P/B) | 1.835 | |
| Price To Book QoQ | -1.833 % | |
| Price To Book YoY | -6.357 % | |
| Price To Book IPRWA | high: 17.822 mean: 6.46 median: 5.083 CNXN: 1.835 low: -8.439 |
|
| Price To Earnings (P/E) | 67.52 | |
| Price To Earnings QoQ | -45.649 % | |
| Price To Earnings YoY | 2.663 % | |
| Price To Earnings IPRWA | high: 287.529 median: 132.799 mean: 119.261 CNXN: 67.52 low: -222.495 |
|
| PE/G Ratio | 1.095 | |
| Price To Sales (P/S) | 2.137 | |
| Price To Sales QoQ | -8.601 % | |
| Price To Sales YoY | -8.192 % | |
| Price To Sales IPRWA | high: 42.058 median: 34.318 mean: 28.778 CNXN: 2.137 low: 0.0 |
|
| FORWARD MULTIPLES | ||
| Forward P/E | 69.06 | |
| Forward PE/G | 1.12 | |
| Forward P/S | 8.83 | |
| EFFICIENCY | OPERATIONAL | |
| Operating Leverage | 9.238 | |
| ASSET & SALES | ||
| Asset Turnover Ratio | 0.604 | |
| Asset Turnover Ratio QoQ | 9.66 % | |
| Asset Turnover Ratio YoY | 0.191 % | |
| Asset Turnover Ratio IPRWA | CNXN: 0.604 high: 0.549 median: 0.284 mean: 0.258 low: 0.001 |
|
| Receivables Turnover | 1.224 | |
| Receivables Turnover Ratio QoQ | 1.451 % | |
| Receivables Turnover Ratio YoY | -6.401 % | |
| Receivables Turnover Ratio IPRWA | high: 4.085 median: 3.503 mean: 3.013 CNXN: 1.224 low: 0.267 |
|
| Inventory Turnover | 4.36 | |
| Inventory Turnover Ratio QoQ | -6.204 % | |
| Inventory Turnover Ratio YoY | -5.334 % | |
| Inventory Turnover Ratio IPRWA | CNXN: 4.36 high: 3.381 mean: 1.226 median: 1.19 low: 0.063 |
|
| Days Sales Outstanding (DSO) | 74.532 | |
| CASH CYCLE | ||
| Cash Conversion Cycle Days (CCC) | 51.312 | |
| Cash Conversion Cycle Days QoQ | 2.914 % | |
| Cash Conversion Cycle Days YoY | 13.238 % | |
| Cash Conversion Cycle Days IPRWA | high: 463.063 CNXN: 51.312 mean: -14.253 median: -57.357 low: -85.228 |
|
| CAPITAL DEPLOYMENT | ||
| Cash Conversion Ratio | 0.986 | |
| CapEx To Revenue | -0.002 | |
| CapEx To Depreciation | -0.565 | |
| CAPITAL, LIQUIDITY & COVERAGE | CAPITAL STRUCTURE | |
| Total Capital | $ 884.8 M | |
| Net Invested Capital | $ 884.8 M | |
| Invested Capital | $ 884.8 M | |
| Net Tangible Assets | $ 809.6 M | |
| Net Working Capital | $ 770.8 M | |
| LIQUIDITY | ||
| Cash Ratio | 0.94 | |
| Current Ratio | 3.093 | |
| Current Ratio QoQ | -1.967 % | |
| Current Ratio YoY | 4.754 % | |
| Current Ratio IPRWA | high: 7.762 CNXN: 3.093 mean: 1.184 median: 0.868 low: 0.034 |
|
| Quick Ratio | 2.731 | |
| Quick Ratio QoQ | 0.162 % | |
| Quick Ratio YoY | 4.976 % | |
| Quick Ratio IPRWA | high: 6.588 CNXN: 2.731 mean: 1.013 median: 0.826 low: 0.201 |
|
| COVERAGE & LEVERAGE | ||
| Debt To EBITDA | 0.019 | |
| Cost Of Debt | 780.019 % | |
| Interest Coverage Ratio | 3.383 | |
| Interest Coverage Ratio QoQ | 77.279 % | |
| Interest Coverage Ratio YoY | -1.493 % | |
| Interest Coverage Ratio IPRWA | high: 81.919 mean: 12.031 median: 8.292 CNXN: 3.383 low: -130.23 |
|
| Operating Cash Flow Ratio | 0.117 | |
| TIMING / LIQUIDITY | ||
| Days Payables Outstanding (DPO) | 45.907 | |
| DIVIDENDS | ||
| Dividend Coverage Ratio | 6.506 | |
| Dividend Payout Ratio | 0.154 | |
| Dividend Rate | $ 0.15 | |
| Dividend Yield | 0.002 | |
| PERFORMANCE | GROWTH | |
| Asset Growth Rate | 1.745 % | |
| Revenue Growth | 8.366 % | |
| Revenue Growth QoQ | -855.736 % | |
| Revenue Growth YoY | -49.38 % | |
| Revenue Growth IPRWA | high: 63.628 % CNXN: 8.366 % mean: 1.224 % median: -1.387 % low: -43.951 % |
|
| Earnings Growth | 61.667 % | |
| Earnings Growth QoQ | -278.151 % | |
| Earnings Growth YoY | -37.074 % | |
| Earnings Growth IPRWA | high: 200.0 % CNXN: 61.667 % mean: -1.068 % median: -4.848 % low: -155.556 % |
|
| MARGINS | ||
| Gross Margin | 18.134 % | |
| Gross Margin QoQ | -0.143 % | |
| Gross Margin YoY | -2.19 % | |
| Gross Margin IPRWA | high: 98.998 % median: 46.491 % mean: 46.341 % CNXN: 18.134 % low: -49.356 % |
|
| EBIT Margin | 4.063 % | |
| EBIT Margin QoQ | 63.567 % | |
| EBIT Margin YoY | -4.512 % | |
| EBIT Margin IPRWA | high: 123.871 % median: 29.991 % mean: 27.081 % CNXN: 4.063 % low: -199.681 % |
|
| Return On Sales (ROS) | 4.063 % | |
| Return On Sales QoQ | 63.567 % | |
| Return On Sales YoY | -4.512 % | |
| Return On Sales IPRWA | high: 68.34 % median: 29.991 % mean: 27.083 % CNXN: 4.063 % low: -188.417 % |
|
| CASH FLOW | ||
| Free Cash Flow (FCF) | $ 24.6 M | |
| Free Cash Flow Yield | 1.517 % | |
| Free Cash Flow Yield QoQ | -145.97 % | |
| Free Cash Flow Yield YoY | -28.88 % | |
| Free Cash Flow Yield IPRWA | high: 12.99 % CNXN: 1.517 % mean: 0.936 % median: 0.756 % low: -17.084 % |
|
| Free Cash Growth | -145.543 % | |
| Free Cash Growth QoQ | -56.73 % | |
| Free Cash Growth YoY | 324.15 % | |
| Free Cash Growth IPRWA | high: 364.739 % mean: 19.455 % median: 16.877 % CNXN: -145.543 % low: -503.15 % |
|
| Free Cash To Net Income | 0.994 | |
| Cash Flow Margin | 5.679 % | |
| Cash Flow To Earnings | 1.74 | |
| VALUE & RETURNS | ||
| Economic Value Added | $ 0.04 | |
| Return On Assets (ROA) | 1.97 % | |
| Return On Assets QoQ | 86.025 % | |
| Return On Assets YoY | -7.944 % | |
| Return On Assets IPRWA | high: 19.293 % median: 7.072 % mean: 5.753 % CNXN: 1.97 % low: -31.863 % |
|
| Return On Capital Employed (ROCE) | 3.426 % | |
| Return On Equity (ROE) | 0.028 | |
| Return On Equity QoQ | 82.303 % | |
| Return On Equity YoY | -6.288 % | |
| Return On Equity IPRWA | high: 0.433 median: 0.356 mean: 0.266 CNXN: 0.028 low: -0.489 |
|
| DuPont ROE | 2.814 % | |
| Return On Invested Capital (ROIC) | 2.535 % | |
| Return On Invested Capital QoQ | 75.19 % | |
| Return On Invested Capital YoY | -142.194 % | |
| Return On Invested Capital IPRWA | high: 14.073 % median: 14.073 % mean: 11.206 % CNXN: 2.535 % low: -15.502 % |
|