Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of accounting and finance staffing company Resources Connection
So what: Driven largely by strong U.S. sales and higher margins, Resources Connection posted quarterly earnings of $17.5 million, or $0.38 a share, easily topping the average analyst estimate of just $0.07 a share. The economic downturn weighed heavily on Resources Connection's bottom line as clients delayed projects, but with the help of its 2009 acquisition of public-relations firm Sitrick & Co., it has returned to profitability over past few quarters.
Now what: I wouldn't jump into Resources Connection just yet. Things are certainly looking up for the company, but with the stock now up more than 40%, and trading at a 30-plus forward P/E, investors might be a little too optimistic. Of course, with enough of a pullback, Resource Connection's capital-light business model seems worth buying into.
Interested in more info on Resources Connection? Add it to your watchlist.
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