Expansion Fuels RMH Teleservices' Stock Rise
"The stock was beaten down following the December debacle with JCPenney, but over the past few weeks RMH has had a good run," said Michael Coady, senior analyst at Sidoti & Co. LLC, New York.
RMH's stock dropped to a 52-week low of $3.50 on Jan. 4 after an unfavorable earnings announcement, which Coady attributed primarily to a significantly reduced telemarketing campaign for J.C. Penney Co. Inc.'s insurance products. JCPenney is one of its biggest insurance clients.
"The JCPenney reduction [resulted in] one-time costs. Since then, technology and telecommunications verticals have been driving growth at the company," Coady said.
He places a buy rating on RMH stock, with a 12-month price target of $15.
The 18-year-old teleservices company devotes 60 percent of its business to outbound telemarketing and the remaining to inbound. The company said it is shifting gradually toward inbound telemarketing and anticipates a 50-50 inbound-outbound split by next year.
"In our shifted economy, companies are increasingly outsourcing customer services because it is less expensive to outsource," said Lisa Stoshak, director of marketing at RMH Teleservices Inc., Bryn Mawr, PA. RMH has not had any problems with do-not-call lists, she said, adding that clients maintain "clean databases."
RMH Teleservices focuses about 30 percent of its business on insurance; 34 percent on financial (credit card companies); 36 percent on telecommunications; and 0.5 percent on technology. Stoshak said the company's telecommunications and technology business has been increasing over the past year, while its financial business has remained relatively stable.
During the second quarter, which ended March 31, revenue from telecommunications rose 56 percent over the same period last year.
To support recent growth, RMH added 1,000 workstations for its telecommunications and technology clients in the second quarter. RMH operates 23 call centers totaling roughly 7,000 workstations.
RMH Teleservices provides a mix of inbound and outbound services for telecommunications firms such as WorldCom and Nextel Communications and inbound services for technology companies including Microsoft, Dell Computer and Gateway. The company provides primarily outbound services for financial companies such as Chase and First Union and inbound services for insurance providers such as JCPenney. RMH is looking to expand its insurance business into health maintenance organizations by next year, Stoshak said, but she would not be more specific.
The teleservices company also is looking to provide inbound services to travel and shipping companies, including package delivery firms and hotel and car rental companies. Stoshak said RMH is negotiating with undisclosed blue-chip companies in those industries and hopes to sign clients in the next 60 days.
"Transportation and travel is a growing industry, and stocks are doing very well in that sector," Stoshak said. "Those companies are also coming to realize that it is cheaper to outsource teleservices."
In addition to teleservices, RMH offers online customer services to its clients, including query and e-mail management. The company will launch real-time online customer service chat programs for existing and prospective clients within a year, Stoshak said.