RECN

**dchamber** Tue Feb 07, 2006 11:55 am

RECN
What about RECN?
This is a smaller company that what I’m used to looking at and they do not have has lot a history. I’ve only been able to find about 5 years of data on them so I assume they went public around 2000/2001.

The P/E is 22.9 and their average over 5 years has been 31.9 which is in-line with the current industry P/E.

Analysts predict a growth rate of 23%. Over the last 4 years they have average over 31% EPS growth.

With this growth rate we are looking at about a 26% average annual return.

They seem to be in solid financial shape with a current ratio of 3.4 when the industry average is 1.3.
The return on equity averages 14.76% over the last 5 years.
The book value per share has been steadily increasing at an average annual rate of almost 26% over the last 5 years.

I’m at a loss here. I don’t have a lot of history for this company and I’m not confident about the numbers. Of course a 26% annual gain builds in a lot of safety. If the actual growth rate turns out to be 12% I would still average a 15% annualized gain.

This is a new area for me and I’m leaning towards passing on it. I would like to hear other opinions.

**blast_investor** Tue Feb 07, 2006 1:35 pm

RECN Resources Connection

Business Model:

The company assists its customers in various accounting and finance projects, such as mergers and acquisitions due diligence, financial analyses, corporate reorganizations, and tax-related projects.

Over past several years, because of SEC tightened regulation, Sarbon-Oxyley law etc, the cost of accounting, audit went up so that RECN type of business is very hot.

But going forward, I have no clue how this business will go. This is not a stable consumer business.

I am not willing to pay for growth on this stock . This stock is too expensive and I do not like it.