RGP

Resources Connection ($RGP): Why Executives Keep 'Bottom Fishing' Amid 50% Stock Crash?

10/15/2025 20:38

Resources Connection ($RGP) is sending confusing signals to investors. With the stock plummeting approximately 50% over the past year while company executives make repeated purchases, questions are mounting about whether this company has truly hit bottom or is sinking deeper into trouble. Resources Connection provides specialized consulting services and temporary staffing in accounting, finance, IT, and legal areas to corporations. As a small-cap company with a market capitalization of approximately $147 million, it operates a business model that's highly sensitive to economic cycles. When companies look to cut costs, external consulting and temporary hiring are typically among the first expenses to be reduced. The price chart tells a grim story. The decline that began at $10.47 in June 2024 shows no signs of stopping. Particularly concerning was the 22% crash from $6.40 to around $5.0 in early April 2025, from which the stock has yet to recover, currently trading at $5.28 (as of September 17). Interestingly, executives have been 'bottom fishing' during this steep decline. On April 4, President Kate Duchene purchased 20,000 shares at $5.14, while Director Roger Carlile bought 25,000 shares at $5.06. On April 8, COO Bhadreskumar Patel added 9,900 shares at $5.05. This represented total purchases of 54,900 shares worth approximately $280,000. Despite these confident executive purchases, the stock continued declining. Even more striking is that President Duchene made another purchase of 23,015 shares at $4.36 on October 15, suggesting her April purchase price was still considered 'expensive.' The financial results explain management's concerns. Three consecutive quarters of revenue decline have occurred: 19.7% decrease in Q2 2024, 10.7% in Q3 2024, and 14.5% in Q1 2025. Analyst price targets have been consistently lowered from $15 to $12.25 to the current $9.50. This raises the critical question: Are the executives' two rounds of major purchases genuine bottom signals, or desperate 'averaging down'? From a positive perspective, insiders know the company's future best and may believe the current stock price significantly undervalues the company's intrinsic worth. The August hiring of Scott Rottmann as President, CFO Advisory demonstrates commitment to financial restructuring. The July 2024 acquisition of Reference Point can be viewed as business diversification efforts. However, concerning signals are more prevalent. The consulting industry is currently taking a direct hit from U.S. economic uncertainty. As of October 2025, declining consumer confidence, government shutdown, and 5.8% inflation expectations are intensifying corporate cost-cutting pressures. Recovery in consulting demand appears unlikely in this environment. Furthermore, Director Anthony Cherbak's sale of 10,000 shares at $4.50 on October 10 suggests disagreement within the executive ranks. While President Duchene made purchases the same week, it's unclear whether this signals a rebound or represents final desperation. Investors should monitor several key indicators. First, whether revenue decline slows or reverses in the next quarter. The scale and frequency of additional executive purchases will also provide important signals. If the stock falls below $4, management will likely step in again. Conversely, warning signs are clear. If revenue decline expands beyond 20% or the gap with competitors widens, structural problems may exist. Any signs of increasing debt or cash depletion should trigger immediate investment review. Summarizing the current situation, Resources Connection faces a high-risk scenario where fundamental improvement must precede any recovery, despite strong executive purchase signals. Short-term prospects depend on economic recovery and increased corporate investment, likely requiring at least 2-3 more quarters. Those trusting management and considering bottom-fishing purchases must prepare for considerable patience and potential for further downside risk.