Rcm Technologies, Inc. (NASDAQ: RCMT)

Sector: Industrials Industry: Conglomerates CIK: 0000700841
Market Cap 139.63 Mn
P/B 3.37
P/E 10.66
P/S 0.45
ROIC (Qtr) 18.66
Div Yield % 0.00
Rev 1y % (Qtr) 16.44
Total Debt (Qtr) 37.91 Mn
Debt/Equity (Qtr) 0.92
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About

RCM Technologies, Inc. (RCMT) is a leading provider of business and technology solutions that aim to optimize the operational performance of its clients. The company operates in the specialty health care, engineering, life sciences, and information technology sectors. It has a global presence, with 29 branch offices located in the United States, Canada, Germany, Puerto Rico, and Serbia. RCM's business activities encompass providing staffing solutions, engineering and design services, and life sciences and information technology services. The company's...

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Investment thesis

Bull case

  • Strong tangible asset base of 107.67M provides 2.84x coverage of total debt 37.91M, indicating robust asset backing and low credit risk.
  • Tangible assets of 107.67M provide exceptional 17.28x coverage of deferred revenue 6.23M, showing strong service capability backing.
  • Tangible assets of 107.67M provide robust 5.53x coverage of other current liabilities 19.48M, indicating strong asset backing.
  • Operating cash flow of 5.88M provides strong 2.47x coverage of operating expenses 2.38M, showing operational efficiency.
  • Strong tangible asset base of 107.67M provides 4.86x coverage of intangibles 22.15M, indicating robust asset quality.

Bear case

  • Operating cash flow of 5.88M barely covers its investment activities of (2.38M), with a coverage ratio of -2.47, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 5.88M provides insufficient coverage of deferred revenue obligations of 6.23M, which is 0.94x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 5.88M shows concerning coverage of stock compensation expenses of 3.65M, with a 1.61 ratio indicating potential earnings quality issues.
  • Operating cash flow of 5.88M provides minimal 0.78x coverage of tax expenses of 7.55M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Tax assets of 131000 provide limited offset against tax liabilities of 4.77M, which is 0.03x, indicating potential future cash flow pressure from tax obligations.

Product and Service Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Conglomerates
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 HON Honeywell International Inc 155.07 Bn 32.79 4.14 34.58 Bn
2 MMM 3M Co 100.16 Bn 20.62 3.16 12.60 Bn
3 VMI Valmont Industries Inc 11.52 Bn 79.14 5.93 0.86 Bn
4 SEB Seaboard Corp /De/ 4.74 Bn 9.55 0.49 1.82 Bn
5 MDU Mdu Resources Group Inc 3.80 Bn 15.84 0.97 2.35 Bn
6 OTTR Otter Tail Corp 3.60 Bn 20.35 3.01 1.04 Bn
7 BBU Brookfield Business Partners L.P. 2.64 Bn -19.71 0.10 43.31 Bn
8 TTI Tetra Technologies Inc 1.44 Bn 11.77 2.33 0.21 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.34 1.07
EV to Cash from Ops. EV/CFO 29.66 26.27
EV to Debt EV to Debt 4.60 3.17
EV to EBIT EV/EBIT 7.52 28.37
EV to EBITDA EV/EBITDA 7.28 2.98
EV to Free Cash Flow [EV/FCF] EV/FCF 49.83 24.12
EV to Market Cap EV to Market Cap 1.25 2.07
EV to Revenue EV/Rev 0.56 3.10
Price to Book Value [P/B] P/B 3.37 0.16
Price to Earnings [P/E] P/E 10.66 -51.36
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 16.94
Dividend per Basic Share Div per Share (Qtr) 0.00 1.03
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -1.97
Interest Coverage Int. cover (Qtr) 9.10 4.08
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 34.68 -245.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -52.92 116.15
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -1.11
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -14.17 233.90
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -5.71 6.29
EBIT Growth (1y) % EBIT 1y % (Qtr) -2.42 58.90
EBT Growth (1y) % EBT 1y % (Qtr) -5.25 -70.32
EPS Growth (1y) % EPS 1y % (Qtr) -13.00 179.10
FCF Growth (1y) % FCF 1y % (Qtr) 132.12 22.76
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.76 19.56
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 2.39 0.64
Cash Payout Ratio Cash Payout (Qtr) 0.00 -0.01
Cash Ratio Cash Ratio (Qtr) 0.03 0.34
Current Ratio Curr Ratio (Qtr) 1.98 1.70
Debt to Equity Ratio Debt/Equity (Qtr) 0.92 -5.62
Interest Cover Ratio Int Coverage (Qtr) 9.10 4.08
Times Interest Earned Times Interest Earned (Qtr) 9.10 4.08
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.20 -14.03
EBIT Margin % EBIT Margin % (Qtr) 7.49 -16.67
EBT Margin % EBT Margin % (Qtr) 6.66 -20.17
Gross Margin % Gross Margin % (Qtr) 27.50 21.90
Net Profit Margin % Net Margin % (Qtr) 4.20 -21.67