What Happened?
Shares of IT solutions provider Connection (NASDAQ: CNXN) jumped 10.4% in the afternoon session after the company reported decent fourth-quarter results that saw profits surpass Wall Street's expectations even as revenue came in light.
The company posted adjusted earnings of $0.91 per share, beating analyst forecasts by 5.8%. This strong profitability was also reflected in its adjusted EBITDA, which came in 11.5% above consensus. However, revenue for the quarter was $702.9 million, missing estimates by 4.4% and representing a slight 0.8% decline from the same period last year. Despite the revenue shortfall, investors appeared to focus on the better-than-expected earnings, signaling confidence in the company's ability to manage costs and maintain profitability.
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What Is The Market Telling Us
Connection’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. Moves this big are rare for Connection and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 15 days ago when the stock gained 3% on the news that President Trump cooled fears of a transatlantic trade war by calling off scheduled tariffs on European allies.
The rally followed a productive meeting in Davos with NATO Secretary General Mark Rutte, where a "framework of a future deal" regarding Greenland and the Arctic region was established. By explicitly ruling out the use of military force and suspending the 10% tariffs previously set for February 1st, the administration provided the "sigh of relief" the market desperately needed after Tuesday's sharp sell-off. Technology and semiconductor leaders like Nvidia and AMD spearheaded the recovery as investors quickly pivoted back into growth stocks. The "Sell America" trade from the prior session reversed sharply, with the Nasdaq Composite jumping 1.5% and the S&P 500 erasing its 2026 losses. This rebound was further supported by a stabilization in the bond market; as tariff-related inflation fears subsided, the 10-year Treasury yield retreated from its recent highs, creating a more favorable backdrop for equity valuations across the board.
Connection is up 16.5% since the beginning of the year, and at $66.29 per share, it is trading close to its 52-week high of $71.73 from February 2025. Investors who bought $1,000 worth of Connection’s shares 5 years ago would now be looking at an investment worth $1,277.
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