Introduction
RSM is a leading global provider of audit, tax, and consulting services with offices in more than 120 countries. Founded in 1926, the company has a long history of providing clients with quality services and reliable advice. In 2018, RSM went public, becoming a publicly traded company for the first time in its 92-year history.
Going public brings with it a range of benefits and challenges. On the one hand, it provides access to capital and can help a company expand its operations. On the other hand, it also increases the company’s exposure to market volatility, which can have a negative impact on shareholders. This article will explore the advantages and disadvantages of investing in RSM as a publicly traded company.
Advantages and Disadvantages of Investing in RSM
When investing in a publicly traded company, there are several factors to consider. These include the company’s financial performance, the overall outlook for the sector, and the potential for future growth. It is important to assess these factors carefully before committing any money.
There are both advantages and disadvantages associated with investing in RSM. On the plus side, the company has an established track record of delivering strong financial performance. It has also grown rapidly since going public, increasing its revenues by over 20% in the last two years. Additionally, RSM has a diversified portfolio of services, giving investors exposure to different sectors.
On the downside, RSM is heavily reliant on the cyclical nature of the accounting and consulting industry. This means that its revenues can be volatile depending on economic conditions. Additionally, the company has a high debt-to-equity ratio, which could limit its ability to take advantage of new opportunities.
Impact of Going Public on Shareholders
Going public has a significant impact on shareholders. When a company goes public, its stock is listed on a major exchange such as the New York Stock Exchange or the NASDAQ. This gives investors access to the company’s shares and allows them to buy and sell them freely.
The stock price of a publicly traded company is determined by supply and demand. If demand for the stock is high, the price will rise. Conversely, if demand is low, the price will fall. As a result, shareholders’ returns can be affected by changes in the stock price.
Financial Performance of RSM Since Going Public
Since going public in 2018, RSM’s financial performance has been strong. The company’s revenue has increased from $5.5 billion in 2018 to $6.7 billion in 2020. Additionally, its net income has almost tripled from $183 million in 2018 to $509 million in 2020.
This strong financial performance has been driven by organic growth, acquisitions, and strategic partnerships. For example, the company recently announced a partnership with Google Cloud to expand its cloud-based offerings. This has enabled the company to tap into new markets and increase its revenues.
Impact of Being Publicly Traded on RSM’s Corporate Strategy
Being publicly traded has had a significant impact on RSM’s corporate strategy. The company has shifted its focus from a traditional business model to a more technology-driven approach. This has enabled the company to take advantage of new opportunities, such as the aforementioned partnership with Google Cloud.
Additionally, being publicly traded has allowed RSM to access capital more easily. This has enabled the company to invest in new technologies and expand its operations. As a result, the company has been able to remain competitive in an increasingly crowded market.
RSM’s Stock Price Since Going Public
Since going public, RSM’s stock price has performed relatively well. The stock was initially priced at $28 per share and has since risen to a high of $50 per share. This represents an increase of 78% since the company’s initial public offering (IPO).
The stock price has been volatile over the past three years, reflecting the company’s reliance on the cyclical nature of the accounting and consulting industry. However, the long-term trend has been positive, with the stock consistently outperforming the S&P 500.
Is It Wise to Invest in RSM as a Publicly Traded Company?
Investing in RSM as a publicly traded company carries both risks and rewards. On the plus side, the company has a strong track record of financial performance and has grown rapidly since going public. Additionally, the company has a diversified portfolio of services, giving investors exposure to different sectors.
On the downside, RSM is heavily reliant on the cyclical nature of the accounting and consulting industry. This means that its revenues can be volatile depending on economic conditions. Additionally, the company has a high debt-to-equity ratio, which could limit its ability to take advantage of new opportunities.
Overall, investing in RSM as a publicly traded company can be a good option for investors who are willing to accept the risks associated with investing in a cyclical industry. However, those looking for a more stable investment should consider other options.
Conclusion
In conclusion, RSM is a publicly traded company that offers investors access to a wide range of services. The company has delivered strong financial performance since going public and its stock price has outperformed the S&P 500. However, it is important to consider the risks associated with investing in a cyclical industry before making any decisions.
Ultimately, investing in RSM as a publicly traded company carries both risks and rewards. Those willing to accept the risks may find that the rewards make it a worthwhile investment. However, those looking for a more stable option should look elsewhere.
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