Resources Connection Inc

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RECN : NASDAQ : Services
$16.3 | %
Today's Range: 0.0 - 0.0
Avg. Daily Volume: 157800.0
03/27/17 - 4:00 PM ET

Financial Analysis


RESOURCES CONNECTION INC's gross profit margin for the second 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 2.48 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has significantly decreased by 31.01% 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 Q2 FY16 Q2 FY15
Net Sales ($mil)147.56150.89
EBITDA ($mil)11.9515.71
EBIT ($mil)11.1514.79
Net Income ($mil)5.698.68


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)63.56110.1
Total Assets ($mil)366.82416.98
Total Debt ($mil)58.00.0
Equity ($mil)238.69346.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin38.339.02
EBITDA Margin8.110.4
Operating Margin7.559.8
Sales Turnover1.611.43
Return on Assets7.077.17
Return on Equity10.878.64
Debt Q2 FY16 Q2 FY15
Current Ratio2.553.49
Debt/Capital0.20.0
Interest Expense0.060.0
Interest Coverage174.160.0


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)29.6437.13
Div / share0.110.1
EPS0.160.23
Book value / share8.059.32
Institutional Own % n/a n/a
Avg Daily Volume157880.0302944.0

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 37.11 for the Professional Services industry and a discount compared to the S&P 500 average of 26.33. To use another comparison, its price-to-book ratio of 2.03 indicates a discount versus the S&P 500 average of 2.93 and a significant discount versus the industry average of 7.96. 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 23.36 Peers 37.11   RECN 15.68 Peers 17.82

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 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 17.21 Peers 19.55   RECN NM Peers 3.04

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

RECN is trading at a premium to 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 2.03 Peers 7.96   RECN -11.40 Peers 30.57

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 0.82 Peers 3.82   RECN -0.78 Peers 11.71

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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