The company has already exceeded 2005 earnings of $3.5 million in the first nine months of 2006 but the 2006 earnings include a $1 million income tax credit. Even after excluding this tax credit, it looks like RCMT will easily surpass 2005 earnings and management claims earlier this year that newly awarded contracts will have a positive impact on 2006 results were indeed true.
While total assets have stayed the same at $106 million since last December, total liabilities have dropped to $25.25 million, making RCM Technologies a wide moat company with very little debt.
Investors were clearly thrilled by these results and at one point Thursday morning the stock was up more than 20%. However this is a very thinly traded stock and susceptible to wild price swings. In retrospect, my decision to sell RCM Technologies along with Infosys (INFY) in the SINLetter model portfolio due to concerns about the economy and to fund new purchases was premature.
Full Disclosure: I continue to hold RCM Technologies in my personal portfolio.