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

Volatility and Risk

Resources Connection has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500. Comparatively, BSQUARE has a beta of 1.74, indicating that its share price is 74% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Resources Connection and BSQUARE, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resources Connection 1 0 0 0 1.00
BSQUARE 0 0 0 0 N/A

Resources Connection presently has a consensus target price of $10.00, indicating a potential downside of 13.64%. Given Resources Connection’s higher possible upside, equities analysts clearly believe Resources Connection is more favorable than BSQUARE.

Earnings & Valuation

This table compares Resources Connection and BSQUARE’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Resources Connection $729.00 million 0.51 $31.47 million $1.03 11.24
BSQUARE $59.28 million 0.34 -$9.18 million N/A N/A

Resources Connection has higher revenue and earnings than BSQUARE.

Profitability

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

Net Margins Return on Equity Return on Assets
Resources Connection 4.52% 11.74% 7.30%
BSQUARE -11.18% -42.72% -18.79%

Insider and Institutional Ownership

84.5% of Resources Connection shares are owned by institutional investors. Comparatively, 18.2% of BSQUARE shares are owned by institutional investors. 10.5% of Resources Connection shares are owned by insiders. Comparatively, 17.9% of BSQUARE shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Resources Connection beats BSQUARE on 9 of the 11 factors compared between the two stocks.

About Resources Connection

Resources Connection, Inc. provides business consulting services under the Resources Global Professionals name in North America, Europe, and the Asia Pacific. The company offers process transformation and optimization, financial reporting and analysis, technical and operational accounting, and merger and acquisition due diligence and integration services; new accounting standards implementation and remediation support services; and audit readiness, and preparation and response services. It also provides information management services comprising program and project management, business and technology integration, data strategy, and business performance management. In addition, the company offers corporate advisory, strategic and crisis communications, and restructuring services; and governance, risk, and compliance (GRC) management services that include governance, assessments, auditing and automation of programs managing regulatory compliance, enterprise risk management, internal audits, operational risk management, and data security and privacy services. Further, it provides strategy development, procurement and supplier management, logistics and materials management, supply chain planning and forecasting, and unique device identification compliance; and change management, organization development and effectiveness, employment engagement, compensation and incentive plan strategies and design, and optimization of human resources technology and operations. Additionally, the company offers legal and regulatory supporting services for commercial transactions, global compliance initiatives, law department operations, and law department business strategy and analytics. It also provides policyIQ, a cloud-based GRC software application. The company was formerly known as RC Transaction Corp. and changed its name to Resources Connection, Inc. in August 2000. Resources Connection, Inc. was founded in 1996 and is headquartered in Irvine, California.

About BSQUARE

BSQUARE Corporation provides software solutions and related engineering services to businesses that develop, market, and sell standalone intelligent systems in North America, Europe, and Asia. The company offers DataV software solution, which addresses various business use cases specific to Industrial Internet of Things (IIoT) applications, including predictive failure, adaptive diagnostics, and IIoT device management. Its DataV solution is used in various industrial sectors and vertical markets, such as commercial transportation, oil and gas extraction, manufacturing, water and power, and other vertical markets. The company's software products also include HTML5 Rendering Engine; and TestQuest 10, a software testing automation tool. It serves original equipment manufacturers, original design manufacturers, corporate enterprises, silicon vendors, and peripheral vendors. BSQUARE Corporation was founded in 1994 and is headquartered in Bellevue, Washington.

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