What to expect from Connection's (CNXN) Q3 earnings

What happened

Connection, an IT solutions provider, will report earnings on Wednesday after market hours. Last quarter, it reported revenues of $854 million, up 12.4% year on year, beating analysts' revenue expectations and earnings-per-share estimates. This quarter, the market expects revenue growth of 9.1% year on year.

Confirmed

Global impact / market context

Connection's results will show whether its recent sales growth can continue. Analysts expect 9.1% revenue growth after a 2.2% decline a year earlier. Because Connection has missed revenue estimates multiple times in two years, even small shortfalls could hurt investor confidence.

Analyst inference

Peer results give mixed signals. TD SYNNEX grew revenue 37.7%, beating estimates by 13.5%, and Knowles grew 20.3%, beating by 6.9%. Yet TD SYNNEX traded down 8.6% and Knowles was down 3.6% after reporting, suggesting strong sales alone did not satisfy investors.

Analyst inference

What to watch

1. Connection reports earnings on Wednesday after market hours; watch whether actual revenue meets the 9.1% year-on-year growth the market expects this quarter. Confirmed
2. Watch whether Connection's revenue beats estimates this time, given it has missed Wall Street's revenue estimates multiple times over the last two years. Analyst inference
3. Watch whether Connection's results and stock reaction follow peers TD SYNNEX and Knowles, which reported strong growth but saw shares fall 8.6% and 3.6%. Proposed

Evidence

• stockstory.org