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Rcm Technologies (RCMT) AI Stock Analysis

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RCMT

Rcm Technologies

(NASDAQ:RCMT)

Rating:67Neutral
Price Target:
$27.00
▼(-1.50% Downside)
Rcm Technologies demonstrates strong operational efficiency and positive earnings call highlights, including record-breaking gross profit and inclusion in the Russell 2000 Growth Index. The stock's technical indicators show a stable outlook, while the valuation remains reasonable. However, the lack of financial leverage and cash flow volatility present potential risks.
Positive Factors
Business Pipeline Expansion
New business pipelines are expanding, particularly in Specialty Healthcare and Engineering, with Aerospace on track for a record year.
Financial Management
Cash improved in 4Q with lower DSO and is expected to improve further, indicating better financial management.
Growth Prospects
RCM Technologies is tracking for double-digit growth, with strong performances in its largest segments, Specialty Healthcare and Engineering.
Negative Factors
Higher Expenses
SG&A was 20.8% of revenue vs 18.9% a year ago and 18.7% in our model due to unusually high medical costs under RCMT’s self-insured plan as well as higher expense for a legal settlement.
Profit Margins
The 4Q gross profit was negatively impacted by a lower gross margin in Engineering Services due to a higher mix of lower margin engagements and one-time issues.
Revenue Decline
There was a 9% decline in Life Sciences, Data & Solutions revenue due to project timing and a deemphasis of the legacy staffing business.

Rcm Technologies (RCMT) vs. SPDR S&P 500 ETF (SPY)

Rcm Technologies Business Overview & Revenue Model

Company DescriptionRCM Technologies, Inc. (RCMT) is a professional services firm that provides a range of technology and consulting services primarily to the healthcare, engineering, and information technology sectors. The company specializes in delivering tailored solutions that include IT staffing, project management, systems integration, and business process outsourcing. RCM Technologies leverages its expertise to support clients in enhancing operational efficiencies and achieving their strategic objectives.
How the Company Makes MoneyRCM Technologies generates revenue primarily through service contracts and consulting engagements. The company earns money by providing IT staffing services, where it charges clients a fee based on the hourly rates of the professionals placed in various projects. Additionally, RCM Technologies derives income from project-based consulting services, which involve fixed-fee or time-and-materials billing arrangements. The company may also benefit from long-term contracts with healthcare and engineering firms, ensuring a stable income stream. Strategic partnerships with technology providers and industry leaders enhance its service offerings and can lead to increased project opportunities, further contributing to its revenue.

Rcm Technologies Earnings Call Summary

Earnings Call Date:Aug 06, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Positive
RCM Technologies has demonstrated strong performance across various segments, including record-breaking gross profit and inclusion in the Russell 2000 Growth Index, indicating positive momentum. However, challenges remain with cash flow volatility and declines in certain revenue streams.
Q2-2025 Updates
Positive Updates
Inclusion in Russell 2000 Growth Index
RCM Technologies has been included in the Russell 2000 Growth Index for the first time in its 50-year history, highlighting its increasing market exposure and brand strength.
Strong Performance in Health Care Services
The Health Care Services Group closed the 2024/2025 school year with strong growth, driven by quality, innovation, and client satisfaction. School revenue for Q2 '25 grew by 21.1% compared to Q2 '24.
Record-Breaking Gross Profit
Consolidated gross profit for Q2 '25 was $22.3 million, growing 11.4% over Q2 '24 and marking the highest gross profit in the past 13 quarters.
Growth in Engineering Segment
Engineering gross profit for Q2 '25 was $6.5 million, an 8.8% increase from Q2 '24, marking the best Engineering gross profit quarter in RCM's history.
Aerospace and Defense Group Exceeds Goals
The Aerospace and Defense Group exceeded business plan goals through Q2 by almost $3 million in revenue, with a significant year-over-year increase in gross margin and EBITDA.
Negative Updates
Challenges in Operating Cash Flow
Operating cash flow was weak for the quarter following a strong Q1, with over $10 million delayed from two major school clients, although 80% was collected subsequently.
Volatile Engineering Gross Margins
Engineering gross margins can be volatile, with Q2 '25 gross margin at 24.5%, down from 26.5% in Q2 '24.
Decline in Non-School Health Care Revenue
Non-school revenue for Q2 '25 was $5.6 million, a decrease from $6.2 million in Q2 '24.
Company Guidance
During the call, RCM Technologies provided guidance for the second quarter of fiscal year 2025, showcasing a strong financial performance across various business units. The company's consolidated gross profit for Q2 2025 reached $22.3 million, reflecting an 11.4% increase over Q2 2024, and adjusted EBITDA grew by 12.9% to $8.1 million. The Health Care Services Group demonstrated robust growth with a gross profit of $12.3 million, up 15.4% from Q2 2024, driven by a 21.1% increase in school revenue, reaching $37.2 million. The Engineering segment achieved its highest gross profit quarter with $6.5 million, an 8.8% rise, despite a slight decrease in gross margin to 24.5%. The IT, Life Sciences, and Data Solutions division also saw a 3.4% growth in gross profit, reaching $3.5 million, with gross margins improving to 39.8%. RCM Technologies anticipates continued growth in the second half of fiscal 2025, expecting low double-digit growth in adjusted EBITDA and a strong Q4 performance.

Rcm Technologies Financial Statement Overview

Summary
Rcm Technologies shows operational efficiency with strong EBIT and EBITDA margins, despite a decrease in revenue and net income. The balance sheet indicates no leverage, which may limit growth potential, but cash flows remain positive, indicating adequate liquidity management.
Income Statement
70
Positive
Rcm Technologies shows a stable gross profit margin and a positive EBIT margin in the TTM, with a slight decrease in net profit and revenue compared to the previous year. Despite this, the EBIT and EBITDA margins remain healthy, indicating operational efficiency.
Balance Sheet
45
Neutral
The balance sheet reveals a significant drop in stockholders' equity and no reported debt in the TTM, which indicates a zero debt-to-equity ratio. However, this could reflect a lack of financial leverage, potentially limiting growth. The equity ratio has decreased, impacting financial stability.
Cash Flow
65
Positive
The cash flow statement indicates a decline in free cash flow but a positive operating cash flow to net income ratio. While free cash flow has decreased, the company maintains a positive cash flow from operations, which is crucial for sustaining business operations.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue290.91M278.38M263.24M284.68M203.88M150.41M
Gross Profit81.39M79.78M76.70M82.93M53.12M38.85M
EBITDA25.20M24.51M24.51M29.53M6.97M-9.89M
Net Income13.56M13.33M16.83M20.89M10.99M-8.87M
Balance Sheet
Total Assets120.99M132.08M120.48M87.96M72.85M68.34M
Cash, Cash Equivalents and Short-Term Investments5.18M4.73M6.28M339.00K235.00K734.00K
Total Debt30.45M42.18M34.00M13.76M18.22M16.77M
Total Liabilities86.39M98.59M94.69M56.00M46.88M46.10M
Stockholders Equity34.60M33.48M25.79M31.96M25.97M22.24M
Cash Flow
Free Cash Flow14.07M3.60M9.55M27.55M347.00K24.74M
Operating Cash Flow16.40M6.17M12.48M28.44M915.00K25.20M
Investing Cash Flow-2.33M-2.57M-2.54M-4.98M6.29M-419.00K
Financing Cash Flow-10.70M-4.83M-3.85M-23.13M-7.55M-25.63M

Rcm Technologies Technical Analysis

Technical Analysis Sentiment
Positive
Last Price27.41
Price Trends
50DMA
25.09
Positive
100DMA
22.90
Positive
200DMA
21.29
Positive
Market Momentum
MACD
0.75
Negative
RSI
68.81
Neutral
STOCH
64.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCMT, the sentiment is Positive. The current price of 27.41 is above the 20-day moving average (MA) of 25.44, above the 50-day MA of 25.09, and above the 200-day MA of 21.29, indicating a bullish trend. The MACD of 0.75 indicates Negative momentum. The RSI at 68.81 is Neutral, neither overbought nor oversold. The STOCH value of 64.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RCMT.

Rcm Technologies Risk Analysis

Rcm Technologies disclosed 6 risk factors in its most recent earnings report. Rcm Technologies reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Rcm Technologies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
67
Neutral
$203.12M15.5241.02%11.01%-15.44%
66
Neutral
$2.65B14.3813.52%3.54%2.94%43.39%
57
Neutral
$125.24M-21.54%-9.86%1.22%
44
Neutral
$113.26M-27.32%-19.00%48.70%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
RCMT
Rcm Technologies
27.41
8.76
46.97%
NNBR
NN
2.49
-0.96
-27.83%
TUSK
Mammoth Energy Services
2.29
-1.32
-36.57%

Rcm Technologies Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
RCM Technologies Approves Performance Stock Units Grant
Neutral
May 7, 2025

On May 6, 2025, RCM Technologies’ Compensation Committee approved grants of up to 2,904 performance stock units to Michael Saks, Division President of Health Care Services, under the company’s 2014 Omnibus Equity Compensation Plan. The vesting of these units is contingent upon the achievement of specific operating income levels during the performance period from December 29, 2024, to January 3, 2026, with provisions for accelerated vesting in the event of a Change in Control.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025