The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 1 "hold" and 1 "sell" or "strong sell"
The average consensus recommendation for the business support services peer group is "buy"
Wall Street's median 12-month price target for Resources Connection Inc is $6.00, about 28.8% above its July 21 closing price of $4.66
The stock recently traded at 155 times the next 12-month earnings vs. a P/E of 14 three months ago
Quarterly results
U.S. professional services firm's fiscal Q4 revenue fell 24% yr/yr amid softer demand
Adjusted EBITDA for fiscal Q4 turned negative, reflecting lower consultant utilization and negative operating leverage
Company attributed declines to reduced demand, shorter quarter, and sale of Sitrick unit
Metric
Actual
Q4 Revenue
$106.12 mln
Q4 Net Loss
$16.07 mln
Q4 Adjusted EBITDA
-$600,000
Q4 Gross Margin
37.6%
Q4 Gross Profit
$39.93 mln
Q4 Operating Income
-$15.76 mln
Drivers of the decline
Softer demand - Co said continued weak demand for traditional operational accounting skills and longer sales cycles for consulting projects weighed on revenue, especially in On-Demand Talent and Consulting segments
Lower billable hours - Qtr included one less week of billable activity and the sale of Sitrick, both contributing to a 20.9% decrease in billable hours
Negative operating leverage - Gross margin declined due to lower consultant utilization and negative operating leverage, despite a slight improvement in pay bill ratio
Outlook and business focus
Company expects recent investments to drive revenue growth as they mature through a ramp-up period
Market conditions seen as broadly consistent with prior quarter; Europe remains weak
Company to focus on evolving On-Demand Talent, scaling Consulting, and leveraging AI
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