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Why Is FTI Consulting (FCN) Down 3.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for FTI Consulting (FCN - Free Report) . Shares have lost about 3.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FTI Consulting due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
FTI Consulting Q2 Earnings Tops Estimates
FTI Consulting delivered better-than-expected second quarter 2020 results, with both earnings and revenue beating the Zacks Consensus Estimate.
Quarterly adjusted earnings per share of $1.32 (excluding 5 cents from non-recurring item) surpassed the Zacks Consensus Estimate by 30.7% but declined 23.7% on a year-over-year basis. The bottom line was negatively impacted by an 18.2% increase in billable headcount, higher variable compensation partially offset by decline in selling, general and administrative expenses as well as lower effective tax rate.
Total revenues of $607.9 million beat the consensus mark by 7.9% and increased marginally on a year-over-year basis. This increase was driven by higher demand in the Corporate Finance & Restructuring segment, nearly muted by lower demand in the Forensic and Litigation Consulting and Technology business segments.
Revenues by Segment
Corporate Finance & Restructuring’s revenues jumped 29.5% year over year to $246 million. The upside was driven by solid demand for restructuring services. The segment contributed 40.5% to total revenues.
Forensic and LitigationConsulting’s revenues declined 27.1% year over year to $106.4 million. The decrease in revenues was primarily due to lower demand for investigations and disputes services. The segment contributed 17.5% to total revenues.
Strategic Communications’ revenues declined 3.8% year over year to $56.9 million. This downtick was due to a $1.9-million decline in pass-through revenues. The segment contributed 9.4% to total revenues.
Technology’s revenues dropped 15.4% year over year to $47.1 million. The downside resulted from lower demand for litigation and global cross-border investigation services as well as lower revenue from completion of transition services. The segment contributed 7.7% to total revenues.
Economic Consulting’s revenues fell 2.6% year over year to $151.1 million. The decline was due to lower demand for non-merger and acquisition-related antitrust, and financial economics services as well as lower realized rates for international arbitration services. The segment contributed 24.9% to total revenues.
Operating Results
Adjusted EBITDA was $75.8 million, down 22% on a year-over-year basis.Adjusted EBITDA margin contracted 350 basis points year over year to 12.5%.
Balance Sheet and Cash Flow
FTI Consulting exited the second quarter with cash and cash equivalents of $304.2 million compared with the prior quarter’s $223.1 million. Long-term debt was $315.8 million compared with $328.2 million witnessed at the end of the previous quarter. The company generated $153 million of net cash from operating activities and CapEx was $5.2 million. It spent $51 million to repurchase 470,853 shares during this period.
2020 Guidance Restored
FTI Consulting anticipates its full year 2020 Adjusted EPS in the range of $5.50-$6.00. Revenues for 2020 is expected between $2.45 billion and $2.55 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, FTI Consulting has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
FTI Consulting has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is FTI Consulting (FCN) Down 3.8% Since Last Earnings Report?
A month has gone by since the last earnings report for FTI Consulting (FCN - Free Report) . Shares have lost about 3.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FTI Consulting due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
FTI Consulting Q2 Earnings Tops Estimates
FTI Consulting delivered better-than-expected second quarter 2020 results, with both earnings and revenue beating the Zacks Consensus Estimate.
Quarterly adjusted earnings per share of $1.32 (excluding 5 cents from non-recurring item) surpassed the Zacks Consensus Estimate by 30.7% but declined 23.7% on a year-over-year basis. The bottom line was negatively impacted by an 18.2% increase in billable headcount, higher variable compensation partially offset by decline in selling, general and administrative expenses as well as lower effective tax rate.
Total revenues of $607.9 million beat the consensus mark by 7.9% and increased marginally on a year-over-year basis. This increase was driven by higher demand in the Corporate Finance & Restructuring segment, nearly muted by lower demand in the Forensic and Litigation Consulting and Technology business segments.
Revenues by Segment
Corporate Finance & Restructuring’s revenues jumped 29.5% year over year to $246 million. The upside was driven by solid demand for restructuring services. The segment contributed 40.5% to total revenues.
Forensic and LitigationConsulting’s revenues declined 27.1% year over year to $106.4 million. The decrease in revenues was primarily due to lower demand for investigations and disputes services. The segment contributed 17.5% to total revenues.
Strategic Communications’ revenues declined 3.8% year over year to $56.9 million. This downtick was due to a $1.9-million decline in pass-through revenues. The segment contributed 9.4% to total revenues.
Technology’s revenues dropped 15.4% year over year to $47.1 million. The downside resulted from lower demand for litigation and global cross-border investigation services as well as lower revenue from completion of transition services. The segment contributed 7.7% to total revenues.
Economic Consulting’s revenues fell 2.6% year over year to $151.1 million. The decline was due to lower demand for non-merger and acquisition-related antitrust, and financial economics services as well as lower realized rates for international arbitration services. The segment contributed 24.9% to total revenues.
Operating Results
Adjusted EBITDA was $75.8 million, down 22% on a year-over-year basis.Adjusted EBITDA margin contracted 350 basis points year over year to 12.5%.
Balance Sheet and Cash Flow
FTI Consulting exited the second quarter with cash and cash equivalents of $304.2 million compared with the prior quarter’s $223.1 million. Long-term debt was $315.8 million compared with $328.2 million witnessed at the end of the previous quarter. The company generated $153 million of net cash from operating activities and CapEx was $5.2 million. It spent $51 million to repurchase 470,853 shares during this period.
2020 Guidance Restored
FTI Consulting anticipates its full year 2020 Adjusted EPS in the range of $5.50-$6.00. Revenues for 2020 is expected between $2.45 billion and $2.55 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, FTI Consulting has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
FTI Consulting has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.