Resources Connection (NASDAQ:RECN) versus CoStar Group (CSGP) Financial Contrast

CoStar Group (NASDAQ:CSGP) and Resources Connection (NASDAQ:RECN) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CoStar Group 1 0 7 0 2.75
Resources Connection 0 1 0 0 2.00

CoStar Group presently has a consensus price target of $464.25, suggesting a potential downside of 3.63%. Resources Connection has a consensus price target of $16.00, suggesting a potential upside of 0.50%. Given Resources Connection’s higher possible upside, analysts clearly believe Resources Connection is more favorable than CoStar Group.

Dividends

Resources Connection pays an annual dividend of $0.52 per share and has a dividend yield of 3.3%. CoStar Group does not pay a dividend. Resources Connection pays out 53.1% of its earnings in the form of a dividend. Resources Connection has raised its dividend for 6 consecutive years.

Earnings and Valuation

This table compares CoStar Group and Resources Connection’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CoStar Group $1.19 billion 14.73 $238.33 million $7.40 65.10
Resources Connection $654.13 million 0.78 $18.82 million $0.98 16.24

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

Profitability

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

Net Margins Return on Equity Return on Assets
CoStar Group 20.00% 9.30% 8.47%
Resources Connection 3.57% 11.85% 7.62%

Volatility and Risk

CoStar Group has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, Resources Connection has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500.

Institutional and Insider Ownership

96.9% of CoStar Group shares are held by institutional investors. Comparatively, 80.3% of Resources Connection shares are held by institutional investors. 2.5% of CoStar Group shares are held by insiders. Comparatively, 9.8% of Resources Connection shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

CoStar Group beats Resources Connection on 12 of the 17 factors compared between the two stocks.

About CoStar Group

CoStar Group, Inc. provides information, analytics, and online marketplaces to the commercial real estate industry in the United States and the United Kingdom. The company offers CoStar Property Professional service that offers inventory of office, industrial, retail, and multifamily properties and land. It also provides CoStar COMPS Professional that covers comparable commercial real estate sales information; CoStar Tenant, an online business-to-business prospecting and analytical tool; CoStar Lease Comps, a solution to capture, manage, and maintain lease data; CoStar Lease Analysis, a workflow tool; CoStar Advertising to market a space for lease or a property for sale; CoStar Private Sale Network, which provides custom-designed and branded Websites; and CoStar and CoStar Go CoStar mobile apps. In addition, the company offers CoStar Real Estate Manager, a real estate and asset management, and lease accounting software; CoStar Risk Analytics, a commercial real estate risk management tool; CoStar Brokerage Applications; CoStar Investment Analysis Request, a business intelligence software; and CoStar Investment Analysis Portfolio Maximizer, a real estate portfolio management software. Further, it provides apartment marketing sites, such as Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Apartamentos.com, WestsideRentals.com, and Cozy.co; LoopNet Premium Lister and LoopNet Power Listings for commercial real estate professionals; LoopLink, an online real estate marketing and database services suite; Listing Manager, an online listing tool; Realla, a commercial property listings and data management platform; LandsofAmerica, LandAndFarm, and LandWatch online marketplaces for rural land for sale; and BizBuySell and BizQuest online marketplaces for operating businesses for sale. The company has a strategic relationship with Buxton Company. The company was founded in 1987 and is headquartered in Washington, the District of Columbia.

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.

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