Resources Connection Misses on the Top and Bottom Lines

Resources Connection (Nasdaq: RECN  ) reported earnings on Jan. 5. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Nov. 26 (Q2), Resources Connection missed slightly on revenues and missed on earnings per share.

Compared to the prior-year quarter, revenue grew, and earnings per share grew significantly.

Gross margins contracted, operating margins were steady, net margins grew.

Revenue details
Resources Connection booked revenue of $145 million. The eight analysts polled by S&P Capital IQ predicted a top line of $147 million. Sales were 4.6% higher than the prior-year quarter's $139 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.11. The nine earnings estimates compiled by S&P Capital IQ predicted $0.12 per share on the same basis. GAAP EPS of $0.58 for Q2 were 53% higher than the prior-year quarter's $0.38 per share.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 37.9%, 160 basis points worse than the prior-year quarter. Operating margin was 6.4%, about the same as the prior-year quarter. Net margin was 17.5%, 490 basis points better than the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods.

Looking ahead
What does the future hold?

Next quarter's average estimate for revenue is $143 million. On the bottom line, the average EPS estimate is $0.08.

Next year's average estimate for revenue is $580 million. The average EPS estimate is $.40.

Investor Sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 161 members out of 178 rating the stock outperform, and 18 members rating it underperform. Among 63 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 58 give Resources Connection a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Resources Connection is outperform, with an average price target of $13.44.

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