Resources Connection (NASDAQ: RECN) and Vectrus (NYSE:VEC) are both small-cap business services companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, earnings, valuation, profitability, analyst recommendations and dividends.
Volatility and Risk
Resources Connection has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Vectrus has a beta of 2.21, suggesting that its stock price is 121% more volatile than the S&P 500.
Insider and Institutional Ownership
81.9% of Resources Connection shares are owned by institutional investors. Comparatively, 85.0% of Vectrus shares are owned by institutional investors. 11.8% of Resources Connection shares are owned by insiders. Comparatively, 3.9% of Vectrus shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Resources Connection pays an annual dividend of $0.48 per share and has a dividend yield of 3.1%. Vectrus does not pay a dividend. Resources Connection pays out 102.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Earnings & Valuation
This table compares Resources Connection and Vectrus’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Resources Connection||$581.21 million||0.80||$39.22 million||$0.47||32.66|
|Vectrus||$1.12 billion||0.29||$45.00 million||$1.90||15.62|
Vectrus has higher revenue and earnings than Resources Connection. Vectrus is trading at a lower price-to-earnings ratio than Resources Connection, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and target prices for Resources Connection and Vectrus, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Resources Connection presently has a consensus price target of $14.00, indicating a potential downside of 8.79%. Given Resources Connection’s higher possible upside, analysts plainly believe Resources Connection is more favorable than Vectrus.
This table compares Resources Connection and Vectrus’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Vectrus beats Resources Connection on 9 of the 16 factors compared between the two stocks.
About Resources Connection
Resources Connection, Inc. is a multinational consulting firm. The Company’s operating entities primarily provide services under the name Resources Global Professionals (RGP). The Company provides consulting and business initiative support services to its global client base in the areas of accounting; finance; corporate governance, risk and compliance (GRC) management; corporate advisory, strategic communications and restructuring; information management; human capital; supply chain management, and legal and regulatory. The Company provides its services and solutions to a client base in a range of industries. Its finance and accounting services encompass accounting operations, financial reporting, internal controls, financial analyses and business transactions. It offers a range of technology solutions, which include enterprise resource planning systems; strategic front-of-the-house systems; human resources (HR) information systems, and supply chain management systems, among others.
Vectrus, Inc. is a provider of services to the United States Government across the world. The Company offers services, including infrastructure asset management, logistics and supply chain management, and information technology and network communication. Its infrastructure asset management services support the United States Army, Air Force and Navy, and include infrastructure services, security, warehouse management and distribution, ammunition management, civil engineering, air base maintenance and operations, communications, emergency services, transportation, and life support activities at various global military installations. Its logistics and supply chain management services support and maintain the vehicle and equipment stocks of the United States Army and Marine Corps. Its information technology and network communication services consist of sustainment of communications systems, network security, systems installation and life cycle management of information technology systems.
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