RCM Technologies (RCMT) Stock Analysis: Brokerage Recommendations and Zacks Rank

RCM Technologies (RCMT) has an average brokerage recommendation (ABR) of 1.67, with two out of three recommendations being Strong Buy. While ABR can be useful in validating investment decisions, it should not be relied solely on, as brokerage firms have a vested interest in the stocks they cover. A more reliable indicator of a stock's near-term price performance is the Zacks Rank, which classifies stocks into five groups based on earnings estimate revisions.

RCM Technologies Inc. (RCMT) reported robust earnings for the second quarter of 2025, surpassing market expectations and showcasing impressive growth across its healthcare and engineering segments. The company's earnings per share (EPS) of $1.32 exceeded the forecasted $0.63, representing a 109.52% surprise [1]. Revenue of $78.17 million also slightly surpassed expectations, contributing to a positive earnings surprise of 0.9%.

Key Takeaways:
- EPS Surprise: RCM Technologies' EPS of $1.32 was significantly higher than the forecasted $0.63.
- Revenue: Actual revenue of $78.17 million was slightly above the expected $77.47 million.
- Stock Performance: Despite strong earnings, the stock declined by 4.74% in aftermarket trading, closing at $22.73.
- Segment Growth: The healthcare segment achieved a 15.4% increase in gross profit, while the engineering and IT/life sciences divisions also contributed positively.

Financial Highlights:
- Revenue: $78.17 million, slightly above the forecast of $77.47 million.
- Earnings per Share: $1.32 compared to a forecast of $0.63.
- Adjusted EBITDA: $8.1 million, reflecting a 12.9% year-over-year growth.
- Healthcare Segment Gross Profit: $12.3 million, up by 15.4%.

Market Reaction:
The company's stock price fell by 4.74% in aftermarket trading, despite the strong earnings. This decline may reflect broader market volatility or specific investor concerns. Analysts maintain a "Strong Buy" consensus with price targets ranging from $30 to $32, suggesting significant upside potential. The stock remains within its 52-week range, with a high of $27.24 and a low of $13.18, indicating room for potential recovery.

Outlook & Guidance:
RCM Technologies anticipates continued growth, projecting low double-digit adjusted EBITDA increases for the remainder of 2025. The company expects to achieve its highest adjusted EBITDA in Q4 2025, driven by expansions in K-12 education, energy, and aerospace sectors. Future guidance includes EPS forecasts of $0.84 for Q4 2025 and $2.52 for the full fiscal year.

Executive Commentary:
Kevin Miller, CFO, emphasized the company’s resilience, stating, "We’re going to grow 2025-2026 school year whether immigration opens up or not." Brad Veazey, Executive Chairman, highlighted market conditions and the company's potential.

Risks and Challenges:
Cash collection issues with school clients, market saturation in key sectors, macroeconomic pressures, dependence on government contracts in aerospace, and immigration policy changes pose potential risks.

References:
[1] https://au.investing.com/news/transcripts/earnings-call-transcript-rcm-technologies-beats-q2-2025-eps-expectations-93CH-3967284