Resources Connection (RGP) AI Stock Analysis

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Resources Connection

(NASDAQ:RGP)

Rating:50Neutral

Price Target:

$5.50

▲(10.00% Upside)

The overall stock score reflects significant financial performance challenges, particularly in revenue and cash flow. While there are positive signals from technical analysis and a relatively high dividend yield, these are outweighed by a negative P/E ratio and mixed earnings call sentiment. The company's strategic focus on international growth and operational efficiency is promising but will take time to offset current market challenges.

Resources Connection (RGP) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$166.70M

Dividend Yield8.4%

Average Volume (3M)302.96K

Price to Earnings (P/E)―

Beta (1Y)1.26

Revenue Growth-12.87%

EPS Growth-1025.47%

CountryUS

Employees722

SectorIndustrials

Sector Strength73

IndustryConsulting Services

Share Statistics

EPS (TTM)-2.23

Shares Outstanding33,339,880

10 Day Avg. Volume289,483

30 Day Avg. Volume302,957

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.66

Enterprise Value/Revenue0.20

Enterprise Value/Gross Profit0.53

Enterprise Value/Ebitda-1.53

Forecast

1Y Price Target

$15.00

Price Target Upside200.00% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

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 Earnings Call Summary

Earnings Call Date:Jul 24, 2025

(Q4-2025)

% Change Since: |

Next Earnings Date:Oct 01, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong performance in gross margins and international growth, particularly in Europe and Asia, alongside Outsourced Services segment growth. However, significant challenges remain with declines in the Consulting and On-Demand segments and a substantial goodwill impairment charge. Delayed project starts and macroeconomic headwinds in China also present challenges.

Q4-2025 Updates

Positive Updates

Strong Gross Margin Performance

Achieved a gross margin of 40.2%, which was above the high end of the outlook range, driven by improved average bill rates and disciplined value-based pricing strategy.

Revenue Growth in Europe and Asia

The Europe and Asia Pac segment delivered top line revenue growth both year-over-year and sequentially, driven by strong performance in the U.K., Netherlands, and Japan.

Outsourced Services Segment Growth

Outsourced Services segment revenue was $11.3 million, up 4% compared to the prior year, with a segment adjusted EBITDA margin of 28%.

Improved Pricing and Bill Rates

Achieved a 4% year-over-year improvement in average bill rate, with Consulting segment bill rates rising by 13%.

Notable Wins in Consulting Segment

Secured multiple new opportunities exceeding $1 million, including finance and tax acquisition integration for a large health system and technology migration for a regional healthcare insurance provider.

Negative Updates

Consulting and On-Demand Segment Revenue Decline

Consulting segment revenue declined by 14% and On-Demand segment by 16% compared to the same quarter last year.

Goodwill Impairment Charge

Recorded a non-cash goodwill impairment charge of $69 million in the Consulting segment due to business performance and reduction in market capitalization.

Challenges in China

Asia Pacific region faced macroeconomic headwinds, particularly in China, which affected overall performance despite growth in Japan.

Delayed Project Starts Impacting Revenue

Several large deals were delayed in terms of project start decisions, impacting the revenue forecast for the first quarter of fiscal year 2026.

Company Guidance

During the conference call, RGP provided guidance focused on several key metrics and strategic initiatives. For the first quarter of fiscal year 2026, the company anticipates revenue between $115 million to $120 million, reflecting typical summer impacts and delayed project starts. Despite these challenges, RGP achieved a strong gross margin of 40.2% in Q4, driven by a 4% improvement in average bill rates year-over-year and favorable medical claims. The company remains optimistic about its diversified services model and expects accelerating growth in the professional staffing landscape in the latter half of the fiscal year. This optimism is supported by a strategic focus on CFO advisory, digital transformation, and AI readiness, which align with market trends and client demands. RGP's pipeline creation is robust, though elongated sales cycles present challenges. The company also noted a 14% expected revenue decline year-over-year for Q1, adjusted for days and currency, while maintaining a strong liquidity position with $86 million in cash and no outstanding debt.

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

Negative

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.

Balance Sheet

Positive

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.

Cash Flow

Neutral

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.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	632.80M	775.64M	805.02M	629.52M	703.35M
Gross Profit	246.07M	313.14M	316.64M	241.40M	275.48M
EBITDA	38.26M	83.94M	92.52M	33.41M	53.79M
Net Income	21.03M	54.36M	67.17M	25.23M	28.29M
Balance Sheet
Total Assets	510.91M	532.00M	581.47M	520.64M	529.18M
Cash, Cash Equivalents and Short-Term Investments	108.89M	116.78M	104.22M	74.39M	95.62M
Total Debt	13.32M	17.73M	75.55M	73.95M	129.90M
Total Liabilities	92.15M	117.48M	209.02M	191.10M	225.52M
Stockholders Equity	418.76M	414.52M	372.45M	329.55M	303.66M
Cash Flow
Free Cash Flow	20.78M	79.62M	46.48M	36.10M	47.18M
Operating Cash Flow	21.92M	81.64M	49.44M	39.94M	49.52M
Investing Cash Flow	-8.55M	3.94M	-2.96M	-3.84M	-26.77M
Financing Cash Flow	-20.71M	-71.91M	-13.37M	-59.46M	30.90M

Resources Connection Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price5.00

Price Trends

50DMA

5.08

Negative

100DMA

5.17

Negative

200DMA

6.32

Negative

Market Momentum

MACD

0.03

Negative

RSI

52.83

Neutral

STOCH

78.76

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RGP, the sentiment is Neutral. The current price of 5 is above the 20-day moving average (MA) of 4.80, below the 50-day MA of 5.08, and below the 200-day MA of 6.32, indicating a neutral trend. The MACD of 0.03 indicates Negative momentum. The RSI at 52.83 is Neutral, neither overbought nor oversold. The STOCH value of 78.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RGP.

Resources Connection Risk Analysis

Resources Connection disclosed 30 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
CRAI	78 Outperform	$1.29B	23.83	29.05%	1.01%	9.28%	44.19%
FC	69 Neutral	$244.24M	24.43	15.47%	―	-0.40%	-40.98%
ICFI	69 Neutral	$1.74B	16.40	11.09%	0.59%	-0.47%	10.03%
Sector *	64 Neutral	$10.73B	15.74	7.60%	2.01%	2.75%	-15.09%
RGP	50 Neutral	$166.70M	―	-61.29%	8.40%	-12.87%	-1025.47%
FORR	48 Neutral	$185.30M	―	-44.74%	―	-9.11%	-6082.17%
AERT	47 Neutral	$26.92M	0.71	112.00%	―	-5.47%	-113.35%

* Industrials Sector Average

Performance Comparison

RGP

Resources Connection

5.00

-4.00

-44.44%

CRAI

Cra International

194.24

35.87

22.65%

FORR

Forrester Research

9.78

-8.01

-45.03%

Franklin Covey Company

19.32

-19.24

-49.90%

ICFI

Icf International

95.21

-65.64

-40.81%

AERT

Aeries Technology

0.57

-1.33

-70.00%

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: Jun 27, 2025