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Resources Connection, Inc. Updates 1 Key Risk Factor
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Resources Connection, Inc. Updates 1 Key Risk Factor

Shares of business consulting firm Resources Connection, Inc. (RGP) have surged 58% over the past year. RPG recently posted robust second-quarter performance on both its top-line and bottom-line fronts.

Revenue jumped 30.7% year-over-year to $200.2 million, beating analysts’ estimates by $10.8 million. This growth was attributable to higher client demand, better operational execution, and delivery.

Furthermore, a better pay/bill ratio and leverage in healthcare costs raised the company’s gross margin to 39.3% from 38% a year ago. Meanwhile, earnings per share at $0.42 came in ahead of analysts’ expectations by $0.07.

With these developments in mind, let us take a look at the changes in RGP’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, Resources Connection’s top two risk categories are Finance & Corporate and Legal & Regulatory, contributing 30% and 19% to the total 27 risks identified, respectively.

In its recent report, the company has changed one key risk factor under the Finance & Corporate risk category. Compared to a sector average of 37%, RGP’s Finance & Corporate risk factor is at 30%.

RGP highlighted that the Secured Overnight Financing Rate (SOFR) has been endorsed by the Alternative Reference Rates Committee (ARRC) as the preferred reference rate for London Interbank Offer Rate (LIBOR). Uncertainty may persist if the new rate gets wide acceptance, which may affect the liquidity of the SOFR market.

Furthermore, RGP’s new credit facility bears a rate of interest based on SOFR, and any volatility and uncertainty around SOFR could result in higher borrowing costs for RGP.

Tracking Insiders

Keeping a tab on insiders stocks can provide timely insights for retail investors. According to TipRanks data on Insider Activity, insiders have sold Resources Connection shares worth $1.1 million in the last three months, indicating a negative insider confidence signal for the stock based on 2 insider transactions in the last 3 months.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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