Reviewing Randstad (OTCMKTS:RANJY) & Resources Connection (NASDAQ:RGP)

Resources Connection (NASDAQ:RGP) and Randstad (OTCMKTS:RANJY) are both business services companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Institutional & Insider Ownership

93.2% of Resources Connection shares are owned by institutional investors. Comparatively, 0.0% of Randstad shares are owned by institutional investors. 7.9% of Resources Connection shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Resources Connection and Randstad, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Resources Connection	2	0	2	0	2.00
Randstad	2	2	0	2	2.33

Resources Connection presently has a consensus target price of $6.00, suggesting a potential upside of 34.23%. Given Resources Connection’s higher possible upside, analysts plainly believe Resources Connection is more favorable than Randstad.

Volatility and Risk

Resources Connection has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Randstad has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.

Valuation & Earnings

This table compares Resources Connection and Randstad”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Resources Connection	$534.63 million	0.28	-$191.78 million	($5.72)	-0.78
Randstad	$26.11 billion	0.27	$133.10 million	$0.19	101.79

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Resources Connection	-35.25%	2.11%	1.54%
Randstad	0.29%	9.05%	3.25%

Dividends

Resources Connection pays an annual dividend of $0.28 per share and has a dividend yield of 6.3%. Randstad pays an annual dividend of $0.69 per share and has a dividend yield of 3.6%. Resources Connection pays out -4.9% of its earnings in the form of a dividend. Randstad pays out 363.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Resources Connection is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Randstad beats Resources Connection on 10 of the 17 factors compared between the two stocks.

About Resources Connection

Resources Connection, Inc. provides consulting services to business customers under the Resources Global Professionals name in North America, Europe, and the Asia Pacific. The company offers services in the areas of transactions, including integration and divestitures, bankruptcy/restructuring, going public readiness and support, financial process optimization, and system implementation; and regulations, such as accounting regulations, internal audit and compliance, data privacy and security, healthcare compliance, and regulatory compliance. It provides transformations services comprising finance transformation, digital transformation, supply chain management, cloud migration, and data design and analytics. 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 Randstad

Randstad N.V. provides solutions in the field of work and human resources (HR) services. The company provides temporary staffing and permanent placement services; job posting; and résumé services on digital platforms. It offers inhouse, enterprise and digital, and tech suite services. In addition, the company provides managed services programs, recruitment process outsourcing, outplacement and career development, and online talent acquisition. It has operations in North America, France, the Netherlands, Germany, Belgium, Luxembourg, Italy, Iberia, other European countries, and internationally. The company was formerly known as Randstad Holding NV and changed its name to Randstad N.V. in April 2018. Randstad N.V. was founded in 1960 and is headquartered in Diemen, the Netherlands.