Critical Analysis: Gartner (NYSE:IT) & Resources Connection (NASDAQ:RGP)

Resources Connection (NASDAQ:RGP) and Gartner (NYSE:IT) are both industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of recent recommendations for Resources Connection and Gartner, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Resources Connection	1	1	2	0	2.25
Gartner	2	6	2	1	2.18

Resources Connection currently has a consensus price target of $7.00, indicating a potential upside of 76.77%. Gartner has a consensus price target of $187.30, indicating a potential upside of 0.79%. Given Resources Connection’s stronger consensus rating and higher probable upside, equities analysts plainly believe Resources Connection is more favorable than Gartner.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Resources Connection	-8.98%	-4.63%	-3.16%
Gartner	11.99%	525.46%	13.45%

Earnings and Valuation

This table compares Resources Connection and Gartner”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Resources Connection	$452.01 million	0.30	-$40.60 million	($1.20)	-3.30
Gartner	$6.50 billion	1.81	$729.23 million	$11.15	16.67

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

Volatility and Risk

Resources Connection has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, Gartner has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.

Institutional and Insider Ownership

93.2% of Resources Connection shares are held by institutional investors. Comparatively, 91.5% of Gartner shares are held by institutional investors. 5.5% of Resources Connection shares are held by insiders. Comparatively, 2.6% of Gartner shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Gartner beats Resources Connection on 10 of the 14 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 Gartner

Gartner, Inc. operates as a research and advisory company in the United States, Canada, Europe, the Middle East, Africa, and internationally. It operates through three segments: Research, Conferences, and Consulting. The Research segment delivers its research primarily through a subscription service that include on-demand access to published research content, data and benchmarks, and direct access to a network of research experts. The Conferences segment offers executives and teams in an organization the opportunity to learn, share, and network. The Consulting segment offers market-leading research, custom analysis, and on-the-ground support services. This segment also offers actionable solutions for IT-related priorities, including IT cost optimization, digital transformation, and IT sourcing optimization. Gartner, Inc. was founded in 1979 and is headquartered in Stamford, Connecticut.