Analyst sees small gains for Resources Connection

Analyst: Weak staffing sector will yield limited 1Q gains for Resources Connection

• On 3:24 pm EDT, Tuesday September 29, 2009

HARTFORD, Conn. (AP) -- Staffing company Resources Connection Inc. likely will report limited gains in its first-quarter financial report on Thursday amid continued weakness in customer spending on professional services, an analyst said.

In a client note, Stifel Nicolaus analyst James Janesky said the company's "upside potential is limited" as it faces smaller margins and additional revenue declines. Resources Connection, based in Irvine, Calif., helps recruit talent for accounting and finance firms, which have scaled back on hiring in a fragile economy.

However, Resources Connection's results could be favorably affected by changes in the currency exchange between the euro and the dollar, Janesky said.

The company is "not typically rewarded for currency movements," but he believes a 6 percent appreciation in the euro compared with the dollar in the period ended Aug. 29 could provide a modest boost to what would otherwise be sequential and year-over-year declines.

When the U.S. currency is weaker, revenue that companies get in foreign currencies translates into more dollars.

Janesky predicts Resources Connection will report a surprise profit of 2 cents per share after the close of market on Thursday. Several analysts are expecting a loss of 4 cents per share, according to Thomson Reuters.

Shares of Resources Connection fell 19 cents to $17.24 in afternoon trading.

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