Resources Connection Inc

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RECN : NASDAQ : Services
$12.8 -0.25 | -1.92%
Today's Range: 12.8 - 13.2
Avg. Daily Volume: 140500.0
05/24/17 - 4:00 PM ET

Financial Analysis


RESOURCES CONNECTION INC's gross profit margin for the third quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. RESOURCES CONNECTION INC is extremely liquid. Currently, the Quick Ratio is 2.46 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has significantly decreased by 31.97% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.

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Income Statement Q3 FY16 Q3 FY15
Net Sales ($mil)143.84146.78
EBITDA ($mil)6.8711.61
EBIT ($mil)5.9610.71
Net Income ($mil)2.885.96


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)44.6196.46
Total Assets ($mil)345.36406.8
Total Debt ($mil)48.00.0
Equity ($mil)233.48343.22


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin36.3237.42
EBITDA Margin4.777.9
Operating Margin4.147.3
Sales Turnover1.71.46
Return on Assets6.627.34
Return on Equity9.88.7
Debt Q3 FY16 Q3 FY15
Current Ratio2.553.83
Debt/Capital0.170.0
Interest Expense0.350.0
Interest Coverage16.990.0


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)29.6536.76
Div / share0.110.1
EPS0.090.16
Book value / share7.889.34
Institutional Own % n/a n/a
Avg Daily Volume139331.0219420.0

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 38.40 for the Professional Services industry and a discount compared to the S&P 500 average of 25.02. To use another comparison, its price-to-book ratio of 1.64 indicates a discount versus the S&P 500 average of 3.00 and a significant discount versus the industry average of 8.08. The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, RESOURCES CONNECTION INC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
RECN 20.48 Peers 38.40   RECN 11.75 Peers 18.82

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

RECN is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

RECN is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
RECN 15.36 Peers 20.07   RECN NM Peers 0.91

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

RECN is trading at a valuation on par with its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

RECN's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
RECN 1.64 Peers 8.08   RECN -20.26 Peers 22.17

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

RECN is trading at a significant discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, RECN is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
RECN 0.65 Peers 3.95   RECN -1.27 Peers 11.18

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

RECN is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

RECN significantly trails its peers on the basis of sales growth

 

 

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