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FTI Consulting's Prospects Bleak on Macroeconomic Issues
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On Jan 9, Zacks Investment Research updated the research report on management service provider FTI Consulting, Inc. (FCN - Free Report) .
Based in Baltimore, MD, FTI Consulting provides specialized consulting services across 29 foreign countries with more than 4,600 employees. The company has a team of highly qualified professionals who provide problem-solving and technology services, primarily to major corporations, financial institutions and law firms.
FTI Consulting is facing the heat due to a challenging macroeconomic environment. The company has grossly underperformed the Zacks categorized Consulting Services industry in the last three months with an average negative return of 4.6% compared to 1.1% for the latter.
Despite improving corporate earnings and strong liquidity, clients’ spending patterns have remained cautious, given the concerns over the current market environment, volatile financial markets and lack of visibility regarding the impact of future tax and regulatory policies. The changes in capital markets, legal or regulatory requirements and general economic factors beyond control have hampered demand for services, thereby affecting the company’s profitability.
In addition, the company is also highly exposed to foreign exchange rate risks. The revamped market dynamics from the Brexit referendum are expected to affect its trade relationship with the U.K. The company is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company. Any unfavorable movement in foreign currency exchange rates might further influence its top line, thereby affecting its long-term growth.
Although FTI Consulting has a Value Growth Momentum score (VGM score) of ‘B’, it has a Zacks Rank #4 (Sell) that negates most of the positives. Our research shows that stocks with a VGM score of ‘A’ or ‘B’, when combined a Zacks Rank #1 (Strong Buy) or #2 (Buy), offer the best investment opportunities for investors. However, investors should better avoid stocks with a Zacks Rank #4 or #5 (Strong Sell), even if it has a Style Score of an ‘A’ or ‘B’.
However, increased regulatory scrutiny and a proliferation of corporate litigation matters have strengthened demand for the company’s products. Additionally, structural change has become a necessity in the rapidly evolving global markets as management look to fend off rivals, protect intellectual property rights and transform businesses via M&A, divestiture and other restructuring activities. These developments call for FTI Consulting’s specialized skill sets, and may boost the company’s business in the future. Whether the company can leverage this competitive edge to improve its fortunes in 2017 remains to be seen.
NV5 Global has a long-term earnings growth expectation of 20%. It has beaten estimates thrice in the trailing four quarters for an average earnings surprise of 6.9%.
Gartner has long-term earnings growth expectation of 17.3%. It has beaten estimates in each of the trailing four quarters with an average positive earnings surprise of 14.5%.
Hackett has long-term earnings growth expectation of 17.3% and is currently trading at a P/E (F1) of 20.2x.
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FTI Consulting's Prospects Bleak on Macroeconomic Issues
On Jan 9, Zacks Investment Research updated the research report on management service provider FTI Consulting, Inc. (FCN - Free Report) .
Based in Baltimore, MD, FTI Consulting provides specialized consulting services across 29 foreign countries with more than 4,600 employees. The company has a team of highly qualified professionals who provide problem-solving and technology services, primarily to major corporations, financial institutions and law firms.
FTI Consulting is facing the heat due to a challenging macroeconomic environment. The company has grossly underperformed the Zacks categorized Consulting Services industry in the last three months with an average negative return of 4.6% compared to 1.1% for the latter.
Despite improving corporate earnings and strong liquidity, clients’ spending patterns have remained cautious, given the concerns over the current market environment, volatile financial markets and lack of visibility regarding the impact of future tax and regulatory policies. The changes in capital markets, legal or regulatory requirements and general economic factors beyond control have hampered demand for services, thereby affecting the company’s profitability.
In addition, the company is also highly exposed to foreign exchange rate risks. The revamped market dynamics from the Brexit referendum are expected to affect its trade relationship with the U.K. The company is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company. Any unfavorable movement in foreign currency exchange rates might further influence its top line, thereby affecting its long-term growth.
Although FTI Consulting has a Value Growth Momentum score (VGM score) of ‘B’, it has a Zacks Rank #4 (Sell) that negates most of the positives. Our research shows that stocks with a VGM score of ‘A’ or ‘B’, when combined a Zacks Rank #1 (Strong Buy) or #2 (Buy), offer the best investment opportunities for investors. However, investors should better avoid stocks with a Zacks Rank #4 or #5 (Strong Sell), even if it has a Style Score of an ‘A’ or ‘B’.
However, increased regulatory scrutiny and a proliferation of corporate litigation matters have strengthened demand for the company’s products. Additionally, structural change has become a necessity in the rapidly evolving global markets as management look to fend off rivals, protect intellectual property rights and transform businesses via M&A, divestiture and other restructuring activities. These developments call for FTI Consulting’s specialized skill sets, and may boost the company’s business in the future. Whether the company can leverage this competitive edge to improve its fortunes in 2017 remains to be seen.
Some better-ranked stocks in the industry include NV5 Global, Inc. (NVEE - Free Report) , Gartner, Inc. (IT - Free Report) and The Hackett Group, Inc. (HCKT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NV5 Global has a long-term earnings growth expectation of 20%. It has beaten estimates thrice in the trailing four quarters for an average earnings surprise of 6.9%.
Gartner has long-term earnings growth expectation of 17.3%. It has beaten estimates in each of the trailing four quarters with an average positive earnings surprise of 14.5%.
Hackett has long-term earnings growth expectation of 17.3% and is currently trading at a P/E (F1) of 20.2x.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>