CNXN
PC Connection, Inc.
$66.44
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 35.3% above fair value
You pay
$66.44
Bear
$39.27
Fair
$49.09
Bull
$58.91
Bear
$39.27
-40.9%
$3.27 × 12x P/E
Fair
$49.09
-26.1%
$3.27 × 15x P/E
Bull
$58.91
-11.3%
$3.27 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
20.3x
Summary
Applying a 15x P/E to adjusted EPS of $3.27, the base-case value is $49.09 per share.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples