Should investors be concerned about CNXN's recent EPS misses?

**Investors should be concerned about CNXN's recent EPS misses and declining growth**, as they indicate potential challenges and risks associated with the company. Here's why: 1. **Consistent Underperformance**: CNXN's EPS has been below expectations, as evidenced by the $0.78 EPS reported in Q4 2024, missing the forecasted $1.02. This is not an isolated incident but part of a broader trend of underperformance. |code|Ticker|Name|Date|Estimate EPS|EPS Surprise|market_code| |---|---|---|---|---|---|---| |CNXN|CNXN.O|PC Connection|2024 Q1|0.63|-0.13|185| |CNXN|CNXN.O|PC Connection|2024 Q2|0.83|0.17|185| |CNXN|CNXN.O|PC Connection|2024 Q3|1|-0.03|185| |CNXN|CNXN.O|PC Connection|2024 Q4|0.9|-0.12|185| 2. **Revenue Decline**: Alongside the EPS misses, CNXN has experienced a decline in revenue, with a full-year revenue decrease of 1.7% year-over-year. This decline in revenue growth could be a red flag for investors regarding the company's financial health and future profitability. 3. **Sector Comparison**: CNXN's negative EPS revisions and declining growth place it in a weaker position compared to other Information Technology stocks. This suggests that the company may be struggling to keep up with industry peers, which could be a cause for concern. 4. **Market Sentiment**: The market has responded negatively to CNXN's earnings reports, with a 1.47% decline in stock price following the Q4 2024 announcement. This sentiment could persist if the company does not show signs of improvement in its financial performance. 5. **Strategic Positioning**: Despite efforts to leverage gross margin improvements and strategic acquisitions, the company's free cash flow margin has been subpar, limiting its opportunities for reinvestment and growth. This may raise questions about the effectiveness of the company's strategic initiatives. 6. **Analyst Ratings**: CNXN has received a Sell rating from a Quant ratings system, indicating that it has historically been associated with poor future stock performance. This external validation of concerns regarding CNXN's prospects adds weight to the notion that investors should be cautious. In conclusion, the combination of CNXN's EPS misses, revenue decline, and weak market sentiment, along with the broader Information Technology sector comparison, warrants the attention and concern of investors. It is important for investors to monitor CNXN's future earnings reports and the company's strategic responses to address these challenges.