Resources Connection (RECN:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Resources Connection(RECN:NAS)

Industrials:Business Services

This Report was generated using the valuation tools available on For a free 30 day trial click here.

Close Price/Date
$15.75 (USD) 04/01/2019

Weighted Valuation
$16.67 (USD)

Overall Rating
Undervalued by 5.8%

Valuation Models Discounted Cash Flow: $18.77 (USD)
(in order of importance) Comparables: $14.00 (USD)
Adjusted Book Value: $15.71 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Fairly valued on an Asset Valuation

Company Overview (RECN:NAS USD)

Price 15.75
Range 15.14 – 16.73
52 week 13.58 – 19.03
Open 15.15
Vol / Avg. 820416/184206
Mkt cap 499.66M
P/E 25.90
Div/yield 0.48/0.03
EPS 0.60
Shares 31.72M
Beta 1.11

Company Description

Resources Connection Inc provides consulting and business initiative support services primarily through its operative subsidiary, Resources Global Professionals. The company offers transformation and improvement, financial reporting and analysis, strategy development, and program and project management services and support. Its clients operate in the accounting, finance, corporate governance, risk and compliance management, corporate advisory, strategic communications and restructuring, information management, human capital, supply chain management, and legal and regulatory sectors.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for RECN:NAS

Using a discounted cash flow model we generated an intrinsic value of $18.77 (USD) for RECN:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

RECN:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $18.77 1% 5% 1% 5%
WACC (or Ke) 7.75 $23.58 $15.58
Terminal Growth Rate 2.80 $15.84 $23.18
Tax Rate 0.35 $20.52 $17.03
Cash Flow 62,151,545 $17.59 $19.95
Capital Expenditures -3,045,400 $18.71 $18.83
Long Term Debt 0 $18.77 $18.77

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $14.00 (USD) for RECN:NAS. We also generated a valuation of $16.68 (USD) using other metrics and comparables.
The comparable companies were Cass Information Systems (CASS:NAS), CBIZ (CBZ:NYS), Forrester Research (FORR:NAS), Multi-Color (LABL:NAS) and Viad (VVI:NYS).

Company RECN:NAS End Date Value
Earnings/Share $0.76 (USD)
Book Value/Share $8.46 (USD)
Sales/Share $21.74 (USD)
Cash Flow/Share $0.37 (USD)
EBITDA/Share $1.15 (USD)
Price Based on Comps Adjustment Factor (%)
$23.62 (USD) -20.3
$23.62 (USD) -65.0
$45.18 (USD) -47.5
$2.92 (USD) 32.6
$14.67 (USD) 0.0
20.00 PE Ratio 31.08 27.61 16.42 67.73 8.35 35.27
1.68 PB Ratio 2.79 3.40 1.82 5.56 0.99 2.20
0.65 PS Ratio 2.08 5.62 1.21 2.35 0.42 0.80
37.97 PCF Ratio 13.02 15.87 11.38 21.55 5.98 10.32
11.28 EV to EBITDA 12.75 0.00 11.05 21.44 9.10 9.39


Using a multiples approach we generated a valuation of  $14.50 (USD) for RECN:NAS

Company RECN:NAS End Date Value
Earnings/Share $0.76 (USD)
Book Value/Share $8.46 (USD)
Sales/Share $21.74 (USD)
Cash Flow/Share $0.37 (USD)
EBITDA/Share $1.15 (USD)
Price Based on Comps Adjustment Factor
$18.18 (USD) 0
$15.24 (USD) 0
$20.27 (USD) 0
$7.43 (USD) 0
$11.36 (USD) 0
Ratios Ratio Average
PE Ratio 23.93
PB Ratio 1.80
PS Ratio 0.93
PCF Ratio 19.86
EV to EBITDA 9.87

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  RECN:NAS for the last 10 years was  1.79

We ran the Adjusted Book Value for  RECN:NAS and generated a book value of  $8.77 (USD)
By multiplying these we get an adjusted valuation of  $15.71 (USD)

Analyst Data

In the Stockcalc database there are 0 analysts that provide a valuation for RECN:NAS.

RECN:NAS Resources Connection

No analyst recommendation
Current Price: not available

No analyst consensus

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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