Willdan Group (NASDAQ: WLDN) and Resources Connection (NASDAQ:RECN) are both small-cap construction companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, profitability, dividends and analyst recommendations.

Insider & Institutional Ownership

66.1% of Willdan Group shares are owned by institutional investors. Comparatively, 81.0% of Resources Connection shares are owned by institutional investors. 13.3% of Willdan Group shares are owned by insiders. Comparatively, 11.8% of Resources Connection shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Willdan Group and Resources Connection, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Willdan Group 0 0 3 0 3.00
Resources Connection 1 1 0 0 1.50

Willdan Group currently has a consensus target price of $37.67, indicating a potential upside of 52.13%. Resources Connection has a consensus target price of $14.00, indicating a potential downside of 12.77%. Given Willdan Group’s stronger consensus rating and higher probable upside, research analysts clearly believe Willdan Group is more favorable than Resources Connection.

Valuation and Earnings

This table compares Willdan Group and Resources Connection’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Willdan Group $208.94 million 1.04 $8.29 million $1.15 21.53
Resources Connection $583.41 million 0.83 $18.65 million $0.47 34.15

Resources Connection has higher revenue and earnings than Willdan Group. Willdan Group is trading at a lower price-to-earnings ratio than Resources Connection, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Willdan Group and Resources Connection’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Willdan Group 3.90% 18.10% 8.73%
Resources Connection 2.60% 8.08% 5.40%

Dividends

Resources Connection pays an annual dividend of $0.48 per share and has a dividend yield of 3.0%. Willdan Group 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.

Risk and Volatility

Willdan Group has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500. Comparatively, Resources Connection has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Summary

Willdan Group beats Resources Connection on 10 of the 16 factors compared between the two stocks.

Willdan Group Company Profile

Willdan Group, Inc. is a holding company. The Company provides professional technical and consulting services to utilities, private industry and public agencies at all levels of government, primarily in California and New York. It operates through four segments: Energy Efficiency Services, Engineering Services, Public Finance Services and Homeland Security Services. The Energy Efficiency Services segment provides energy efficiency consulting services to utilities, state agencies, municipalities, private industry and non-profit organizations. The Engineering Services segment offers a range of engineering and planning services to its public and private sector clients. The Public Finance Services segment provides support for the various financing techniques employed by public agencies to finance their operations and infrastructure. The Homeland Security Services segment provides national preparedness, homeland security consulting, public safety and emergency response services.

Resources Connection Company Profile

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.

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