Resources Connection, Inc. (RGP) stock analysis

P/E against its history

Not enough price and earnings history to compare.

P/E against the industry

Needs positive earnings and enough profitable companies in the industry.

EV/EBITDA against its history

Needs positive EBITDA and price history.

P/B below the industry

Resources Connection's price-to-book of 0.59 is below the Miscellaneous Business Services median of 2.48.

Trading below fair value

The share price of $2.74 is below our fair value estimate of $7.85.

Margin of safety over 20%

The price is 65.1% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -16.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growth over 3 years

Needs positive EPS three years ago and today.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew -19.6% over the last twelve months; the Miscellaneous Business Services median is 9.9%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 37.0% over the last twelve months, against 38.3% a year earlier.

Return on equity under 15%

Return on equity was -25.1% over the last twelve months and averaged -9.0% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was -30.1%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Resources Connection's return on equity of -25.1% is below the Miscellaneous Business Services median of 6.8%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin below its 5-year average

Net margin was -10.7% over the last twelve months, against a 5-year average of -5.0%.

Net margin below the industry

Resources Connection's net margin of -10.7% is below the Miscellaneous Business Services median of 3.8%.

No debt

Resources Connection has no borrowings on its latest balance sheet.

Debt not rising

With no debt today, leverage cannot have risen.

Debt covered by cash flow

There is no debt to cover.

Interest well covered

No meaningful interest expense to cover.

Short-term assets cover short-term debts

Current assets are 2.85 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 1.42; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Resources Connection paid dividends worth 10.2% of the share price over the last twelve months.

Yield above Treasuries

The 10.2% yield is above the 4.4% on a 1-year Treasury.

Yield in the top quarter

The top quarter of US dividend payers yield 3.8% or more; Resources Connection yields 10.2%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.