Resources Connection Stock Fair Value Calculation – Resources Connection Undervalued, But No Clear Buying Signal in Sight
December 10, 2023
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RESOURCES ($NASDAQ:RGP): The stock appears to be undervalued, yet no tangible buying signal has emerged as of this point. The company’s financials show strong growth, with revenue and operating cash flows increasing over the past several years. Given these strong fundamentals, investors may expect that the stock should be higher.
However, despite the favorable fundamentals, there has yet to be a clear sign that suggests that the stock is poised to make a move. It could be that the market is simply waiting for some positive news from the company in order to trigger a buying frenzy. Until then, investors should wait and watch for any potential buying signals.
Share Price
With a stock price of $14.3 after closing on Friday, Resources Connection (also known as RECN) has seen an increase of 1.3% from its prior closing price of $14.1. Despite this slight upswing in the stock price, there is little evidence to suggest that RECN is currently undervalued in the market. It is important to note that the market has been volatile in recent days, which may have caused some investors to shy away from RECN shares. Furthermore, despite the modest increase in stock prices, RECN has not seen a substantial increase in trading volume.
This lack of buying activity may be a sign that investors are not seeing a clear buying signal in the current market conditions. Nevertheless, RECN is still a potentially attractive investment opportunity for those with a long-term outlook and prepared to accept the inherent risks associated with investing in equities. While there is no clear buying signal at present, investors should keep an eye on RECN for any potential changes in the future. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Resources Connection. More…
| Total Revenues | Net Income | Net Margin |
| 741.75 | 39.34 | 5.6% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Resources Connection. More…
| Operations | Investing | Financing |
| 84.72 | 1.12 | -44.35 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Resources Connection. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 522.39 | 103.55 | 12.3 |
Key Ratios Snapshot
Some of the financial key ratios for Resources Connection are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 3.0% | 19.2% | 7.1% |
| FCF Margin | ROE | ROA |
| 11.2% | 7.9% | 6.3% |
Analysis – Resources Connection Stock Fair Value Calculation
We at GoodWhale recently conducted an analysis of RESOURCES CONNECTION‘s fundamentals. After extensive research, we determined that the fair value of its shares is around $16.2, which was calculated using our proprietary Valuation Line. Currently, the stock is trading at $14.3 – a price that is 11.5% below the fair value. This indicates that RESOURCES CONNECTION shares are currently undervalued in the market. More…
Peers
In recent years, the competition between Resources Connection Inc and its competitors has intensified, as the companies have fought for market share in the highly competitive consulting industry. Link and Motivation Inc have emerged as the two largest competitors, and both have been aggressively pursuing new business opportunities. ZICO Holdings Inc and Capita PLC are also major players in the industry, and all four companies are vying for a place in the top tier of the consulting industry.
– Link and Motivation Inc ($TSE:2170)
Link and Motivation Inc is a company that provides cloud-based human capital management solutions. Its market cap as of 2022 is $93.49 billion and its ROE is 20.5%. The company offers a suite of products that helps organizations manage their employee data, including employee onboarding, performance management, and compliance.
– ZICO Holdings Inc ($SGX:40W)
Mizuho Financial Group, Inc. is a Japanese bank holding company headquartered in Tokyo, Japan. The company was founded in 2000 and is the second-largest financial services company in Japan with over $2 trillion in assets. The company offers banking, securities, and other financial services to its customers. Mizuho has over 3,000 branches and over 60,000 employees. The company’s stock is listed on the Tokyo Stock Exchange and the New York Stock Exchange.
– Capita PLC ($LSE:CPI)
Capita PLC is a provider of outsourcing and professional services to the public and private sectors in the United Kingdom. It has a market cap of 429.49M as of 2022 and a Return on Equity of 14.08%. The company offers a range of services including IT, HR, marketing, customer contact, and property management.
Summary
Resources Connection (RECN) is an international professional services firm that helps companies improve their business performance. As an investment, it has been undervalued, meaning its stock price has not kept up with its potential.
However, due to its uncertain outlook, there is no clear buying signal as of yet. The company itself provides consulting, technology, and financial services to companies in the US, UK, and Asia. Investment analysis of the company generally focuses on its strong organic growth, its strong balance sheet and cash flow, and its attractive dividend yield.
Additionally, the company’s diversified revenue streams provide stability across different markets. The company also has a good track record of meeting or beating analyst estimates. Finally, Resources Connection has a good track record of share repurchases and acquisitions that have raised shareholder value.
