Resources Connection, Inc. (NASDAQ:RGP) Just Reported Earnings, And Analysts Cut Their Target Price
One of the biggest stories of last week was how Resources Connection, Inc. (NASDAQ:RGP) shares plunged 27% in the week since its latest quarterly results, closing yesterday at US$2.83. Revenues of US$98m were in line with expectations, although statutory losses per share were US$0.23, some 18% smaller than was expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the two analysts covering Resources Connection, is for revenues of US$401.3m in 2027. This implies a measurable 6.6% reduction in Resources Connection's revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 44% to US$0.75. Before this latest report, the consensus had been expecting revenues of US$426.4m and US$0.83 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
View our latest analysis for Resources Connection
The consensus price target fell 5.5% to US$6.50, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2027 compared to the historical decline of 11% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.2% annually. So while a broad number of companies are forecast to grow, unfortunately Resources Connection is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Resources Connection going out as far as 2029, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Resources Connection (including 1 which is concerning) .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.