Resources Connection (NASDAQ: RECN) and Ituran Location and Control Ltd. (US) (NASDAQ:ITRN) are both small-cap business services companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, earnings, valuation, dividends and profitabiliy.

Insider & Institutional Ownership

83.4% of Resources Connection shares are owned by institutional investors. Comparatively, 52.1% of Ituran Location and Control Ltd. (US) shares are owned by institutional investors. 8.6% of Resources Connection shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Resources Connection pays an annual dividend of $0.44 per share and has a dividend yield of 3.3%. Ituran Location and Control Ltd. (US) pays an annual dividend of $0.96 per share and has a dividend yield of 3.1%. Resources Connection pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ituran Location and Control Ltd. (US) pays out 53.0% of its earnings in the form of a dividend.

Risk & Volatility

Resources Connection has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, Ituran Location and Control Ltd. (US) has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Profitability

This table compares Resources Connection and Ituran Location and Control Ltd. (US)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Resources Connection 3.20% 8.08% 5.76%
Ituran Location and Control Ltd. (US) 19.57% 37.03% 22.61%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Resources Connection and Ituran Location and Control Ltd. (US), as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resources Connection 1 2 0 0 1.67
Ituran Location and Control Ltd. (US) 0 0 1 0 3.00

Resources Connection presently has a consensus target price of $12.00, indicating a potential downside of 9.43%. Ituran Location and Control Ltd. (US) has a consensus target price of $31.00, indicating a potential upside of 0.49%. Given Ituran Location and Control Ltd. (US)’s stronger consensus rating and higher probable upside, analysts plainly believe Ituran Location and Control Ltd. (US) is more favorable than Resources Connection.

Valuation and Earnings

This table compares Resources Connection and Ituran Location and Control Ltd. (US)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Resources Connection $583.41 million 0.68 $41.75 million $0.55 24.09
Ituran Location and Control Ltd. (US) $209.49 million 3.09 $62.54 million $1.81 17.04

Ituran Location and Control Ltd. (US) has higher revenue, but lower earnings than Resources Connection. Ituran Location and Control Ltd. (US) is trading at a lower price-to-earnings ratio than Resources Connection, indicating that it is currently the more affordable of the two stocks.

Summary

Ituran Location and Control Ltd. (US) beats Resources Connection on 10 of the 16 factors compared between the two stocks.

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.

Ituran Location and Control Ltd. (US) Company Profile

Ituran Location and Control Ltd. is a provider of location-based services, consisting of stolen vehicle recovery (SVR), fleet management services and other tracking services. The Company also provides wireless communication products used in connection with its location-based services and various other applications. Its operations consist of two segments: location-based services and wireless communications products. Its location-based services segment consists of its SVR and tracking services, fleet management and value-added services consisted of personal locater services and concierge services. Its wireless communications products segment consists of short and medium range two-way machine-to-machine wireless communications products that are used for various applications, including automatic vehicle location (AVL) and automatic vehicle identification. It primarily provides its services, as well as sells and leases its products in Israel, Brazil, Argentina and the United States.

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