RCMT

RCMT is a small-cap business-and-technology solutions/staffing firm that has quietly turned into a profitable compounder. Revenue has grown every year of the record shown — $150M → $204M → $263M → $278M → $319M — and FY2026's $319M is up 14.7% YoY. Crucially, growth is falling through to owners: net income rose 22.6% to $16.3M, operating cash flow tripled (+207%) to $19.0M against just $1.59M of capex, and diluted EPS jumped 27.4% to $2.14 — faster than net income because management retired 7.4% of the share count with $7.36M of buybacks. That capital-return discipline, plus a 35.5% ROE and retained earnings swinging up 275% to $10.4M, is exactly what you want in a low-margin services business.

Valuation does not reward any of this. At $28.50 the stock trades at 13.3x FY EPS and 0.6x sales — a sub-1 PEG on ~27% EPS growth. For a company throwing off cash, buying back stock, and growing double digits, that is a demanding-of-nothing multiple. Balance-sheet leverage looks optically high (liabilities/equity 1.92x), but liabilities actually fell 10.3% while equity grew 37.3%, and the debt is a variable-rate revolver where a 100bp rate move only shifts interest expense ~$0.4M — immaterial against $25.1M of operating income. The real balance-sheet caveat is thin cash of $2.92M (down 38%), which leaves little cushion and makes the company reliant on its credit line for working-capital swings.