Critical Contrast: Healthequity (HQY) vs. Resources Connection (RECN)

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Healthequity (NASDAQ:HQY) and Resources Connection (NASDAQ:RECN) are both medical companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Earnings & Valuation

This table compares Healthequity and Resources Connection’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Healthequity $229.52 million 18.49 $47.36 million $0.54 126.63
Resources Connection $654.13 million 0.74 $18.82 million $0.98 15.69

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

Profitability

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

Net Margins Return on Equity Return on Assets
Healthequity 24.52% 12.42% 11.79%
Resources Connection 3.25% 10.89% 7.02%

Institutional & Insider Ownership

93.0% of Healthequity shares are held by institutional investors. Comparatively, 81.0% of Resources Connection shares are held by institutional investors. 4.0% of Healthequity shares are held by insiders. Comparatively, 9.8% of Resources Connection shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Healthequity has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, Resources Connection has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Healthequity 0 4 8 0 2.67
Resources Connection 1 1 0 0 1.50

Healthequity currently has a consensus target price of $92.83, suggesting a potential upside of 35.76%. Resources Connection has a consensus target price of $16.50, suggesting a potential upside of 7.28%. Given Healthequity’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Healthequity is more favorable than Resources Connection.

Dividends

Resources Connection pays an annual dividend of $0.52 per share and has a dividend yield of 3.4%. Healthequity does not pay a dividend. Resources Connection pays out 53.1% of its earnings in the form of a dividend. Resources Connection has increased its dividend for 5 consecutive years.

Summary

Healthequity beats Resources Connection on 12 of the 17 factors compared between the two stocks.

About Healthequity

HealthEquity, Inc. provides various solutions for managing health care accounts, health reimbursement arrangements, and flexible spending accounts for health plans, insurance companies, and third-party administrators in the United States. The company offers healthcare saving and spending platform, a cloud-based platform for individuals to make health saving and spending decisions, pay healthcare bills, compare treatment options and prices, receive personalized benefit and clinical information, earn wellness incentives, grow their savings, and make investment choices; and health savings accounts. It also provides mutual fund investment platform; and online-only investment advisory services through Advisor, a Web-based tool. In addition, the company offers health reimbursement and flexible spending arrangements solutions; and Employee Retirement Income Security Act's plan administration and investment services. HealthEquity, Inc. was founded in 2002 and is headquartered in Draper, Utah.

About Resources Connection

Resources Connection, Inc. provides business consulting services under the Resources Global Professionals name in North America, Europe, and the Asia Pacific. The company offers process transformation and optimization, financial reporting and analysis, technical and operational accounting, and merger and acquisition due diligence and integration services; new accounting standards implementation and remediation support services; and audit readiness, and preparation and response services. It also provides information management services comprising program and project management, business and technology integration, data strategy, and business performance management. In addition, the company offers corporate advisory, strategic and crisis communications, and restructuring services; and governance, risk, and compliance (GRC) management services that include governance, assessments, auditing and automation of programs managing regulatory compliance, enterprise risk management, internal audits, operational risk management, and data security and privacy services. Further, it provides strategy development, procurement and supplier management, logistics and materials management, supply chain planning and forecasting, and unique device identification compliance; and change management, organization development and effectiveness, employment engagement, compensation and incentive plan strategies and design, 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 strategy and analytics. It also provides policyIQ, a cloud-based GRC 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.

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