Resources Connection (RECN) vs. Broadridge Financial Solutions (BR) Head-To-Head Review

Resources Connection (NASDAQ: RECN) and Broadridge Financial Solutions (NYSE:BR) are both business services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, dividends, profitability, risk and valuation.

Dividends

Resources Connection pays an annual dividend of $0.48 per share and has a dividend yield of 3.0%. Broadridge Financial Solutions pays an annual dividend of $1.46 per share and has a dividend yield of 1.3%. Resources Connection pays out 75.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Broadridge Financial Solutions pays out 46.6% of its earnings in the form of a dividend. Broadridge Financial Solutions has increased its dividend for 10 consecutive years.

Earnings & Valuation

This table compares Resources Connection and Broadridge Financial Solutions’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Resources Connection $583.41 million 0.86 $18.65 million $0.64 24.84
Broadridge Financial Solutions $4.14 billion 3.27 $326.80 million $3.13 36.65

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

Profitability

This table compares Resources Connection and Broadridge Financial Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Resources Connection 3.12% 9.15% 6.05%
Broadridge Financial Solutions 9.37% 45.33% 14.79%

Risk and Volatility

Resources Connection has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, Broadridge Financial Solutions has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Insider and Institutional Ownership

80.0% of Resources Connection shares are owned by institutional investors. Comparatively, 84.6% of Broadridge Financial Solutions shares are owned by institutional investors. 11.8% of Resources Connection shares are owned by insiders. Comparatively, 2.6% of Broadridge Financial Solutions shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and price targets for Resources Connection and Broadridge Financial Solutions, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resources Connection 2 1 0 0 1.33
Broadridge Financial Solutions 0 4 0 0 2.00

Resources Connection currently has a consensus target price of $15.33, indicating a potential downside of 2.95%. Broadridge Financial Solutions has a consensus target price of $97.67, indicating a potential downside of 15.56%. Given Resources Connection’s higher possible upside, equities analysts clearly believe Resources Connection is more favorable than Broadridge Financial Solutions.

Summary

Broadridge Financial Solutions beats Resources Connection on 12 of the 16 factors compared between the two stocks.

About Resources Connection

Resources Connection, Inc. provides agile consulting services in North America, Europe, and the Asia Pacific. The company offers finance and accounting services, including process transformation and optimization, financial reporting and analysis, technical and operational accounting, merger and acquisition due diligence and integration, audit readiness, preparation and response, implementation of new accounting standards, and remediation support. It also provides information management services, such as program and project management, business and technology integration, data strategy, and business performance management. In addition, the company offers corporate advisory, strategic communications, and restructuring services; and corporate governance, risk, and compliance management services, such as contract and regulatory compliance, enterprise risk management, internal controls management, and operation and information technology (IT) audits. Further, it provides supply chain management services comprising strategy development, procurement and supplier management, logistics and materials management, supply chain planning and forecasting, and unique device identification compliance; and human capital services, including change management, organization development and effectiveness, compensation and incentive plan strategies, 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 strategies and analytics. It also provides policyIQ, a proprietary cloud-based governance, risk, and compliance 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 Broadridge Financial Solutions

Broadridge Financial Solutions, Inc. provides investor communications and technology-driven solutions for the financial services industry worldwide. The company's Investor Communication Solutions segment processes and distributes proxy materials to investors in equity securities and mutual funds, as well as facilitates related vote processing services; and offers ProxyEdge, an electronic proxy delivery and voting solution. It also provides registered proxy, registrar, stock transfer, and record-keeping services to corporations; and distributes regulatory reports and corporate action/reorganization event information, and tax reporting solutions. In addition, this segment offers customer communication solutions, including processing and distributing its clients' transactional, regulatory, and marketing communications through print and digital channels. Further, it provides cloud-based marketing and customer communication tools, as well as customer and account data aggregation and reporting services; and creates sales and educational content, including seminars and a library of financial planning topics, as well as customizable advisor Websites, search engine marketing, and electronic and print newsletters. Additionally, this segment offers mutual fund and retirement, and mutual fund trade processing services. Its Global Technology and Operations segment offers computerized real-time transaction processing services that include desktop productivity tools, data aggregation, performance reporting, portfolio management, order capture and execution, trade confirmation, settlement, reference data, reconciliations, and accounting; multi-currency solutions to support real-time global trading; and managed services solutions, which comprise securities clearing, record-keeping, and custody-related functions. The company was founded in 1962 and is headquartered in Lake Success, New York.

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