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Resources Connection (RGP)
NASDAQ:RGP
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Resources Connection
(NASDAQ:RGP)
Rating:49Neutral
Price Target:―
Resources Connection (RGP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$172.95M
Dividend Yield10.71%
Average Volume (3M)262.78K
Price to Earnings (P/E)―
Beta (1Y)1.04
Revenue Growth-16.27%
EPS Growth-589.83%
CountryUS
Employees722
SectorIndustrials
Sector Strength90
IndustryConsulting Services
Share Statistics
EPS (TTM)-1.34
Shares Outstanding33,069,275
10 Day Avg. Volume174,941
30 Day Avg. Volume262,779
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)0.65
Price to Sales (P/S)0.00
P/FCF Ratio65.13
Enterprise Value/Market Cap0.78
Enterprise Value/Revenue0.06
Enterprise Value/Gross Profit0.64
Enterprise Value/Ebitda-2.03
Forecast
1Y Price Target
$10.00Price Target Upside100.00% Upside
Rating ConsensusHold
Number of Analyst Covering2
Resources Connection Business Overview & Revenue Model
Company DescriptionResources Connection, Inc. (RGP) is a global consulting firm that specializes in providing business solutions and professional services to clients across various industries. Founded in 1996 and headquartered in Irvine, California, RGP offers expertise in areas such as finance, accounting, information management, governance, risk, compliance, and human capital. The firm serves a diverse clientele, including Fortune 1000 companies, providing tailored solutions to meet their organizational needs and drive business performance.
How the Company Makes MoneyRGP makes money through a revenue model primarily based on providing consulting services to its clients. The company generates revenue by charging hourly rates for the professional services delivered by its consultants. These services include project management, business process improvement, regulatory compliance, and strategic advisory in finance, IT, and human resources. RGP's key revenue streams are derived from its client engagements across various industries, including healthcare, financial services, manufacturing, and technology. The firm also benefits from strategic partnerships and alliances that enhance its service offerings and expand its market reach. Additionally, RGP's business model focuses on maintaining a flexible workforce of experienced professionals, allowing the company to scale its operations in response to client demand and market conditions.
Resources Connection Financial Statement Overview
Summary
Resources Connection is facing challenges in revenue and profitability, as evidenced by declining income statement metrics. The balance sheet remains strong with low leverage but reduced equity. Cash flow generation has weakened, particularly in free cash flow, which may impact future operational flexibility. The company needs to address these operational challenges to improve financial health.Income Statement
The company has experienced a significant decline in revenue and profitability, with TTM revenue falling from $632.8 million to $560.2 million and net income turning negative. Gross profit margin decreased to 37.3% in the TTM period from 38.9% in 2023. The net profit margin showed a stark decline to -19.3% in TTM from 3.3% annually in 2023. EBIT and EBITDA margins have also turned negative, indicating operational challenges.35
Negative
Balance Sheet
The company maintains a healthy equity position with an equity ratio of 73.9% in TTM. The debt-to-equity ratio remains low at 0.10, indicating low leverage. However, there is a decline in stockholders' equity from $418.8 million in 2023 to $277.8 million in TTM, which could be a concern if the trend continues.70
Positive
Cash Flow
Free cash flow has significantly decreased in the TTM period to $2.8 million from $20.8 million in 2023, impacting the free cash flow to net income ratio. Operating cash flow remains positive but has decreased, reflecting challenges in cash generation compared to prior periods.45
Neutral
| Breakdown | |||||
| TTM | Dec 2023 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 560.19M | 632.80M | 775.64M | 805.02M | 629.52M | 703.35M | Gross Profit |
| 209.08M | 246.07M | 313.14M | 316.64M | 241.40M | 275.48M | EBIT |
| -119.10M | 28.78M | 72.79M | 83.44M | 22.95M | 36.65M | EBITDA |
| -72.20M | 38.26M | 83.94M | 92.52M | 33.41M | 53.79M | Net Income Common Stockholders |
| -108.00M | 21.03M | 54.36M | 67.17M | 25.23M | 28.29M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 72.50M | 108.89M | 116.78M | 104.22M | 74.39M | 95.62M | Total Assets |
| 375.63M | 510.91M | 532.00M | 581.47M | 520.64M | 529.18M | Total Debt |
| 26.55M | 13.32M | 17.73M | 75.55M | 73.95M | 129.90M | Net Debt |
| -45.94M | -95.57M | -99.05M | -28.68M | -445.00K | 34.27M | Total Liabilities |
| 97.80M | 92.15M | 117.48M | 209.02M | 191.10M | 225.52M | Stockholders Equity |
| 277.83M | 418.76M | 414.52M | 372.45M | 329.55M | 303.66M |
| Cash Flow | Free Cash Flow | ||||
| 2.77M | 20.78M | 79.62M | 46.48M | 36.10M | 47.18M | Operating Cash Flow |
| 5.31M | 21.92M | 81.64M | 49.44M | 39.94M | 49.52M | Investing Cash Flow |
| -13.21M | -8.55M | 3.94M | -2.96M | -3.84M | -26.77M | Financing Cash Flow |
| -30.85M | -20.71M | -71.91M | -13.37M | -59.46M | 30.90M |
Resources Connection Technical Analysis
Negative
5.00
Price Trends
5.86
Negative
6.93
Negative
7.85
Negative
Market Momentum
-0.17
Positive
32.76
Neutral
4.01
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RGP, the sentiment is Negative. The current price of 5 is below the 20-day moving average (MA) of 5.52, below the 50-day MA of 5.86, and below the 200-day MA of 7.85, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 32.76 is Neutral, neither overbought nor oversold. The STOCH value of 4.01 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RGP.
Resources Connection Risk Analysis
Resources Connection disclosed 28 risk factors in its most recent earnings report. Resources Connection reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Resources Connection Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $1.63B | 15.18 | 11.64% | 0.63% | 1.95% | 17.98% | |
75 Outperform | $1.32B | 26.09 | 23.18% | 0.95% | 8.49% | 21.06% | |
64 Neutral | $4.46B | 11.94 | 5.17% | 249.36% | 4.00% | -12.35% | |
60 Neutral | $307.42M | 17.78 | 24.81% | ― | 2.53% | 5.95% | |
57 Neutral | $30.75M | 0.42 | 112.00% | ― | 34.17% | ― | |
54 Neutral | $204.55M | ― | -45.64% | ― | -9.61% | -18170.36% | |
49 Neutral | $172.95M | ― | -31.18% | 10.71% | -16.27% | -589.83% |
* Industrials Sector Average
Performance Comparison
RGP
Resources Connection
5.00
-5.69
-53.23%
CRAI
Cra International
187.42
19.55
11.65%
FORR
Forrester Research
10.61
-7.55
-41.57%
FC
Franklin Covey Company
22.93
-13.79
-37.55%
ICFI
Icf International
87.20
-55.43
-38.86%
AERT
Aeries Technology
0.67
-0.73
-52.14%
Resources Connection Earnings Call Summary
Earnings Call Date:Apr 02, 2025
(Q3-2025)
| % Change Since: -24.59%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed sentiment. The company showed strong international growth, improved operational efficiency, and technological investments as positive factors. However, these were offset by significant challenges in the US market, revenue declines in the on-demand segment, and a substantial goodwill impairment charge. The focus on international markets and operational efficiency provides hope for future growth, but immediate market challenges and revenue concerns persist.Q3-2025 Updates
Positive Updates
Revenue Achievement
Total revenue for Q3 was $129.4 million, in line with expectations despite client budget constraints and slower project ramp-ups.
International Growth
Strengthening across practices in Europe, Japan, and the Philippines with improvements in bill rates, pipeline expansion, and return of large project pursuits.
Consulting Segment Success
Achieved double-digit bill rate improvement, with enterprise engagements increasing by over 20%. Doubled the number of $1 million-plus engagements from last year.
Operational Efficiency
Lowered cost structure, reducing run rate SG&A by 8% since the first fiscal quarter through optimized headcount and reduced discretionary spending.
Technological Advancements
Investments in technology and infrastructure enhancements in North America to leverage AI and automation for client service and recruitment.
Negative Updates
US Market Uncertainty
Sluggish US market due to increased uncertainty and decreased consumer confidence, impacting decision-making and project delays.
Revenue Decline in On-Demand Segment
On-demand segment revenue down 24% from the prior year, with adjusted EBITDA margin falling from 11% to 5%.
Goodwill Impairment
Recorded a non-cash goodwill impairment charge of $42 million due to continued sluggish demand in on-demand and consulting segments.
Challenges in China
Ongoing macroeconomic challenges in China impacting growth, despite optimism for future acceleration in project extensions.
Delayed Decision Making
Significant delays in project decisions and RFP outcomes due to government policy uncertainties and market conditions.
Company Guidance
During the call, Resources Connection, Inc. provided detailed guidance for the third quarter of fiscal year 2025, ending February 22, 2025. The company reported total revenue of $129.4 million, which aligned with expectations, despite client budget constraints and slower project ramp-ups. The gross margin was reported at 35.1%, better than expected, while SG&A expenses showed a notable improvement, lowering the run rate by 8% since the first fiscal quarter. The consulting segment saw a 13% increase in bill rates compared to the prior year, and the number of $1 million-plus opportunities doubled. However, the company noted a 2% decline in the consulting segment revenue year-over-year and a 24% decrease in the on-demand segment revenue. The Europe and Asia Pac segment experienced a 2% revenue decline, while the outsourced services segment showed a slight growth of 3%. Despite macroeconomic challenges, the company emphasized its strategic initiatives in enhancing client offerings, improving operational efficiency, and making targeted investments, with a focus on expanding in key markets like Southeast Asia and India. The fourth-quarter outlook anticipates revenue between $132 million and $137 million, with a projected gross margin of 36% to 37%.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.