RCMT · RCM Technologies
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $34.82
Note written ·
How this view changed
- · Rating cut from Medium to Low. Results, 12 November 2026: Third-quarter Engineering revenue was $30.7 million, down 2.2% from a year earlier and below the $39.5 million of the second quarter, while total revenue of $73.4 million came in under an estimate of $82.1 million.
Price against the kill line
9.4% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $34.82, set on 14 November 2026, after the last close drawn. The shares are down 22.0% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $34.82, which would erase the 9.65% report-day fall of 12 November 2026 and show the shares leading again; a fourth-quarter Engineering revenue figure above the second quarter's $39.5 million would also show the call wrong.
Research onlyNot in the portfolio.
The business · as of
RCM Technologies sells engineering services, specialty health-care staffing (largely school-based) and life-sciences, data and solutions services, earning fees on billed work. Revenue was $73.4 million in the quarter to 3 October 2026.
What is changing, and what follows · as of
- What is changing now
- On 12 November 2026 RCM reported third-quarter revenue of $73.4 million, up 4.4%; Engineering revenue was $30.7 million against $39.5 million in the second quarter, and the shares fell 9.65% that session.
- What follows for the company
- Engineering gross margin recovered to 25.9% from 17.8% in the second quarter, lifting consolidated gross margin to 27.1%; operating margin was 6.2% against 8.5%. Credit-line borrowings were $22.7 million.
- What follows for its customers, suppliers and competitors
- No customer, supplier or competitor is named in the quarter's filing. Specialty Health Care, the school-based staffing segment, grew 12.4% to $33.7 million while Engineering shrank 2.2% from a year earlier.
What the price assumes · as of
At the 13 November 2026 close (filed inputs to 12 November 2026): P/E 12.8, EV/sales 0.7 and EV/EBIT 9.3, with an enterprise value of $246 million and a free-cash-flow yield of 9.2%. That holds only if net income stays near the $18 million of the last four quarters while Engineering revenue holds near its third-quarter $30.7 million.
Key figures from the filings · Industrials
Quarter to 3 October 2026, filed 12 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 73.4
- Revenue, change on a year (%)
- +4.4
- Gross margin (%)
- 27.1
- Operating margin (%)
- 6.2
- Free cash flow, four quarters ($M)
- 20.6
- Net cash, cash less debt ($M)
- −20.8
- Price to earnings (×)
- 12.8
- Enterprise value to sales (×)
- 0.7
All filed numbers
What RCM Technologies reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 73.4 | +4.4 | 27.1 | 6.2 |
| first filed | 93.8 | +20.0 | 25.7 | 8.5 |
| first filed | 83.0 | −1.7 | 26.5 | 7.2 |
| first filed | 86.5 | +12.4 | 28.1 | 9.2 |
| first filed | 70.3 | +16.4 | 27.6 | 5.6 |
| first filed | 78.2 | +13.0 | 28.5 | 8.4 |
| Pre-tax income ($M) | 4.1 |
| Net income ($M) four quarters: 17.6 | 2.7 |
| Diluted shares, change on a year (%) against the quarter to 27 September 2025 | −4.1 |
| Operating cash flow ($M) | 21.3 |
| Capital spending ($M) | 0.7 |
| Free cash flow ($M) | 20.6 |
| Cash and short-term investments ($M) | 1.9 |
| Debt ($M) credit line | 22.7 |
| Net cash, cash less debt ($M) | −20.8 |
| Deferred revenue ($M) +45.4% on a year | 9.0 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | Not reported |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 53.0 |
| Market value ($M) | 225 |
| Enterprise value, market value plus net debt ($M) | 246 |
| Enterprise value to sales (×) | 0.7 |
| Enterprise value to operating income (×) | 9.3 |
| Price to earnings (×) | 12.8 |
| Price to book value (×) | 4.2 |
| Free-cash-flow yield (%) | 9.2 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.3% of shares outstanding sold short, 3.2 days of average trading to cover, −3.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $1.7M |
| 12 monthsfrom | $0 | $12.6M |
The thesis
RCM Technologies is more likely to lag the S&P 500 over the next three months: Engineering revenue fell to $30.7 million in the quarter to 3 October 2026, below the second quarter's $39.5 million, so the energy-services surge did not repeat. The fiscal 2026 year-end report, expected around March–April 2027, shows whether Engineering revenue returns above $39.5 million.
The third-quarter results came on 12 November 2026, a week later than the 5 November 2025 release a year earlier. Revenue was $73.4 million, up 4.4% from $70.3 million, and GAAP net income was $2.7 million, or $0.37 per diluted share (company release and 10-Q, 12 November 2026). Company news that day showed adjusted earnings per share of $0.53 against an estimate of $0.50, and revenue of $73.4 million against an estimate of $82.1 million.
The shares fell 9.65% on 12 November 2026 to $31.46 and closed at $31.54 on 13 November 2026. The second-quarter test was Engineering revenue above $39.5 million with gross margin at or above 25.7%. Margin passed at 27.1%. Engineering revenue failed.
The rating is Low. The valuation is modest and profit is growing, but the segment that carried the case shrank, and revenue missed the estimate by a wide margin.
Bullish and bearish views on RCM Technologies, Inc.
The bull case on RCM Technologies, Inc. (RCMT), in brief: earnings are cheap against profit growth. The bear case: the Engineering surge did not repeat.
Bull case
- Earnings are cheap against profit growth. At the 13 November 2026 close the shares trade at 12.8 times earnings with a free-cash-flow yield of 9.2% (filed inputs to 12 November 2026). Net income was $18 million over the four quarters to 3 October 2026.
- Engineering margin recovered. Engineering gross margin was 25.9% in the third quarter, against 17.8% in the second quarter and 22.0% a year earlier (10-Q filed 12 November 2026; company releases of 13 August 2026 and 5 November 2025). Engineering gross profit was $8.0 million.
- Specialty Health Care is growing. The segment's revenue rose 12.4% to $33.7 million, with a 25.5% gross margin (10-Q filed 12 November 2026). It is now the largest segment.
- Profit measures rose on modest revenue growth. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $6.3 million, up 14.2% from $5.5 million (release of 12 November 2026). Diluted shares were 7.30 million against 7.61 million a year earlier.
- Buybacks are shrinking the share count. The company repurchased 348,366 shares at an average of $19.03 over the 39 weeks to 3 October 2026, with $28.3 million left under the authorization (10-Q filed 12 November 2026).
Bear case
- The Engineering surge did not repeat. Engineering revenue was $30.7 million in the third quarter, down 2.2% from $31.4 million a year earlier and below the $39.5 million of the second quarter (10-Q filed 12 November 2026). The second-quarter gain of 49% came mainly from energy services, per Staffing Industry Analysts on 14 August 2026.
- Revenue missed by a wide margin. Revenue of $73.4 million compared with an estimate of $82.1 million in company news of 12 November 2026. The shares fell 9.65% that session.
- Operating margin stepped down from the second quarter. It was 6.2% in the quarter to 3 October 2026, against 8.5% in the quarter to 4 July 2026 (filed financials). Consolidated gross margin of 27.1% was below the 27.6% of a year earlier.
- The balance sheet is thin. Cash and short-term investments were $1.9 million against $22.7 million of credit-line borrowings at 3 October 2026. The credit commitment reverted from $75.0 million to $65.0 million on 1 September 2026, with $23.5 million of availability (10-Q filed 12 November 2026).
- Insiders sold well above the current price. SEC Form 4 filings show Executive Chairman Bradley Vizi sold 100,000 shares at an average of $37.89 on 14 August to 17 August 2026, and CFO Kevin Miller sold 22,501 shares at an average of $42.17 on 28 August to 31 August 2026 under a Rule 10b5-1 plan. No later Form 4 sales are filed.
Price setup
The shares closed at $31.54 on 13 November 2026, 27.8% below the 52-week intraday high of $43.68 set on 8 October 2026. The price change over three months is −22.0%. The 52-week closing low is $17.55, from 12 February 2026.
The last close is below the 50-day moving average of $38.29 and above the 200-day moving average of $29.33, both as of 13 November 2026. The report-day fall on 12 November 2026 took the close from above the 50-day average to well under it.
Catalysts ahead
- ~31 March 2027 (est.): Fiscal 2026 year-end results, including fourth-quarter segment revenue (the last two year-end reports came on 12 March 2025 and 3 April 2026). Shows whether Engineering revenue returns above the $39.5 million of the second quarter or stays near the $30.7 million of the third quarter.
What would change the view
A daily close above $34.82, which would erase the 9.65% report-day fall of 12 November 2026 and show the shares leading again; a fourth-quarter Engineering revenue figure above the second quarter's $39.5 million would also show the call wrong.
What it trades with
RCM reports three segments: Specialty Health Care, Engineering, and Life Sciences, Data and Solutions. Third-quarter revenue was $33.7 million, $30.7 million and $8.9 million respectively (10-Q filed 12 November 2026). Specialty Health Care depends on school-based staffing and follows the school calendar, which is why the third quarter is seasonally softer than the second. Revenue was $93.8 million in the quarter to 4 July 2026.
Engineering revenue depends on project timing for power and industrial customers, so it can swing from one quarter to the next. The second-quarter jump and the third-quarter fall show how large those swings are.
With about 7.3 million diluted shares, single-session moves can be large. The shares fell 8.80% on 5 November 2026 and rose 5.52% on 9 November 2026, both without company news. Larger staffing or engineering peers are a weak guide to day-to-day moves.
The evidence, claim by claim (7)
- Third-quarter revenue was $73.4 million, up 4.4% from $70.3 million; GAAP net income was $2.7 million, or $0.37 per diluted share; adjusted EBITDA was $6.3 million, up 14.2%. RCM Technologies third quarter 2026 results release · as of
- Engineering revenue was $30.7 million in the quarter to 3 October 2026, against $31.4 million a year earlier (down 2.2%); Specialty Health Care was $33.7 million (up 12.4%); Life Sciences, Data and Solutions was $8.9 million. RCM Technologies 10-Q for the quarter ended 3 October 2026 · as of
- Third-quarter gross margin was 25.9% in Engineering, 25.5% in Specialty Health Care, 37.7% in Life Sciences, Data and Solutions and 27.1% consolidated, against 27.6% consolidated a year earlier. RCM Technologies 10-Q for the quarter ended 3 October 2026 · as of
- Second-quarter Engineering revenue was $39.5 million with an Engineering gross margin of 17.8% and consolidated gross margin of 25.7%. RCM Technologies second quarter 2026 results release · as of
- Adjusted earnings per share were $0.53 against an estimate of $0.50, and revenue of $73.401 million against an estimate of $82.138 million. company news, RCM Technologies Q3 earnings coverage · as of
- The company repurchased 348,366 shares at an average of $19.03 over the 39 weeks to 3 October 2026, with $28.3 million left under the authorization; credit-line borrowings were $22.7 million. RCM Technologies 10-Q for the quarter ended 3 October 2026 · as of
- CFO Kevin Miller sold 22,501 shares at an average of $42.17 on 28 August to 31 August 2026 under a Rule 10b5-1 plan; Executive Chairman Bradley Vizi sold 100,000 shares at an average of $37.89 on 14 August to 17 August 2026. SEC Form 4 filings dated 1 September 2026 and 18 August 2026 · as of
Sources
- RCM Technologies, Inc. Announces Third Quarter 2026 Results · manilatimes.net ·
- SEC EDGAR
- RCM Technologies (RCMT) Stock News & Updates · stocktitan.net
- Investor Relations - RCM Technologies · rcmt.com