PRA Group (PRAA) versus Resources Connection (RECN) Critical Comparison

PRA Group (NASDAQ: PRAA) and Resources Connection (NASDAQ:RECN) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
PRA Group 7.57% 2.98% 0.90%
Resources Connection 2.60% 8.08% 5.40%

Analyst Recommendations

This is a breakdown of recent ratings for PRA Group and Resources Connection, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PRA Group 2 2 0 0 1.50
Resources Connection 1 1 0 0 1.50

PRA Group currently has a consensus target price of $40.00, indicating a potential upside of 19.23%. Resources Connection has a consensus target price of $14.00, indicating a potential downside of 9.97%. Given PRA Group’s higher probable upside, analysts plainly believe PRA Group is more favorable than Resources Connection.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
PRA Group $830.58 million 1.82 $85.09 million $1.24 27.06
Resources Connection $583.41 million 0.80 $18.65 million $0.47 33.09

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

Dividends

Resources Connection pays an annual dividend of $0.48 per share and has a dividend yield of 3.1%. PRA Group does not pay a dividend. Resources Connection pays out 102.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

PRA Group has a beta of 1.51, suggesting that its stock price is 51% more volatile than the S&P 500. Comparatively, Resources Connection has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Institutional and Insider Ownership

82.3% of Resources Connection shares are owned by institutional investors. 2.1% of PRA Group shares are owned by company insiders. Comparatively, 11.8% 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 company is poised for long-term growth.

Summary

PRA Group beats Resources Connection on 9 of the 14 factors compared between the two stocks.

PRA Group Company Profile

PRA Group, Inc. (PRA Group) is a financial and business services company with operations in the Americas and Europe. The Company’s primary business is the purchase, collection and management of portfolios of nonperforming loans. The Company operates through the account receivables management segment. It also provides fee-based services, such as vehicle location, skip tracing and collateral recovery for auto lenders, government entities and law enforcement; revenue administration, audit and revenue discovery/recovery services for local government entities; class action claims recovery services and purchases; servicing of consumer bankruptcy accounts in the United States, and contingent collections of nonperforming loans in Europe and South America. The Company’s portfolio of nonperforming loans includes a set of accounts that can be categorized by asset type, age and size of account, level of previous collection efforts, payment history, and geography.

Resources Connection Company Profile

Resources Connection, Inc. is a multinational consulting firm. The Company’s operating entities primarily provide services under the name Resources Global Professionals (RGP). The Company provides consulting and business initiative support services to its global client base in the areas of accounting; finance; corporate governance, risk and compliance (GRC) management; corporate advisory, strategic communications and restructuring; information management; human capital; supply chain management, and legal and regulatory. The Company provides its services and solutions to a client base in a range of industries. Its finance and accounting services encompass accounting operations, financial reporting, internal controls, financial analyses and business transactions. It offers a range of technology solutions, which include enterprise resource planning systems; strategic front-of-the-house systems; human resources (HR) information systems, and supply chain management systems, among others.

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