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Why Is FTI Consulting (FCN) Down 2.2% Since the Last Earnings Report?
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It has been about a month since the last earnings report for FTI Consulting, Inc. (FCN - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
FTI Consulting Misses on Q4 Earnings
FTI Consulting reported tepid fourth-quarter 2016 results with adjusted earnings of $9.9 million or $0.24 per share compared with $10.2 million or $0.24 per share in the year-earlier quarter on relatively flatter revenues. The adjusted earnings missed the Zacks Consensus Estimate by $0.05.
GAAP net income for the reported quarter was $7.1 million or $0.17 per share compared with $10.3 million or $0.25 per share in the year-ago quarter. The year-over-year decrease in GAAP earnings was primarily due to higher operating expenses in the reported quarter.
For full-year 2016, GAAP earnings improved to $85.5 million or $2.05 per share from $66.1 million or $1.58 per share in 2015, primarily driven by higher revenues. Adjusted earnings for 2016 were $93.2 million or $2.24 per share compared with $76.8 million or $1.84 per share in 2015.
Revenues for the quarter were $441.9 million compared with $442.2 million in the year-earlier quarter. Revenues beat the Zacks Consensus Estimate of $433 million. Excluding the estimated negative impact of foreign currency translation, revenues improved 2.6% year over year. For 2016, revenues increased to $1,810.4 million from $1,779.1 million in 2015.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the quarter were $30.3 million, down from $35.2 million in the prior-year quarter, owing to higher compensation-related expenses in the Corporate Finance & Restructuring segment and lower demand in the Forensic and Litigation Consulting segment.
Segmental Details
Corporate Finance & Restructuring revenues were $113.4 million, up 1.6% year over year due to higher realized pricing for restructuring services and higher success fees. Adjusted EBITDA for the segment was $16.3 million, down from $18.9 million in the year-ago quarter, driven primarily by higher compensation costs.
Economic Consulting revenues increased to $129.3 million from $118.6 million in the prior-year quarter, largely driven by higher demand of merger and acquisition related antitrust services. Adjusted EBITDA came in at $19.0 million versus $18.8 million in the prior-year quarter.
Forensic and Litigation Consulting revenues fell to $105.5 million in the quarter from $116.7 million in the year-earlier quarter, driven by lower demand for advisory and health solutions. Adjusted EBITDA for the segment decreased to $6.3 million from $8.8 million on lower revenues.
Technology revenues declined to $43.5 million from $46.6 million in the prior-year quarter. The decline in revenues was attributable to lower M&A-related activities and lower demand for litigation services. Adjusted EBITDA came in at $5.6 million compared with $6.0 million in the prior-year quarter driven by lower revenues.
Strategic Communications revenues increased to $50.3 million from $48.8 million in the prior-year quarter, owing to higher project-based revenues in the Europe, Middle East and Africa (EMEA) region. Adjusted EBITDA for the segment was $8.4 million compared with $7.6 million in the prior-year quarter, largely due to higher revenues.
Balance Sheet & Cash Flow
FTI Consulting had cash and cash equivalents of $216.2 million at Dec 31, 2016, compared with $149.8 million in the year-ago period. Total debt was $365.5 million at year-end 2016, down from $494.8 million at Dec 31, 2015. Net cash provided by operating activities in 2016 was $233.5 million compared with $139.9 million in the year-ago period.
The company repurchased 537,400 shares in 2016 at an average price of $39.97 per share for $21.5 million. At the year end, FTI Consulting had approximately $81.4 million worth of shares available under its $100.0 million share repurchase authorization.
Guidance
For 2017, the company expects revenues to be approximately $1.80–$1.90 billion. GAAP earnings are expected to be within $1.95–$2.30 per share, while adjusted earnings per share are likely to be in the range of $2.10–$2.40.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 13% due to these changes.
At this time, FTI Consulting's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 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.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is FTI Consulting (FCN) Down 2.2% Since the Last Earnings Report?
It has been about a month since the last earnings report for FTI Consulting, Inc. (FCN - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
FTI Consulting Misses on Q4 Earnings
FTI Consulting reported tepid fourth-quarter 2016 results with adjusted earnings of $9.9 million or $0.24 per share compared with $10.2 million or $0.24 per share in the year-earlier quarter on relatively flatter revenues. The adjusted earnings missed the Zacks Consensus Estimate by $0.05.
GAAP net income for the reported quarter was $7.1 million or $0.17 per share compared with $10.3 million or $0.25 per share in the year-ago quarter. The year-over-year decrease in GAAP earnings was primarily due to higher operating expenses in the reported quarter.
For full-year 2016, GAAP earnings improved to $85.5 million or $2.05 per share from $66.1 million or $1.58 per share in 2015, primarily driven by higher revenues. Adjusted earnings for 2016 were $93.2 million or $2.24 per share compared with $76.8 million or $1.84 per share in 2015.
Revenues for the quarter were $441.9 million compared with $442.2 million in the year-earlier quarter. Revenues beat the Zacks Consensus Estimate of $433 million. Excluding the estimated negative impact of foreign currency translation, revenues improved 2.6% year over year. For 2016, revenues increased to $1,810.4 million from $1,779.1 million in 2015.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the quarter were $30.3 million, down from $35.2 million in the prior-year quarter, owing to higher compensation-related expenses in the Corporate Finance & Restructuring segment and lower demand in the Forensic and Litigation Consulting segment.
Segmental Details
Corporate Finance & Restructuring revenues were $113.4 million, up 1.6% year over year due to higher realized pricing for restructuring services and higher success fees. Adjusted EBITDA for the segment was $16.3 million, down from $18.9 million in the year-ago quarter, driven primarily by higher compensation costs.
Economic Consulting revenues increased to $129.3 million from $118.6 million in the prior-year quarter, largely driven by higher demand of merger and acquisition related antitrust services. Adjusted EBITDA came in at $19.0 million versus $18.8 million in the prior-year quarter.
Forensic and Litigation Consulting revenues fell to $105.5 million in the quarter from $116.7 million in the year-earlier quarter, driven by lower demand for advisory and health solutions. Adjusted EBITDA for the segment decreased to $6.3 million from $8.8 million on lower revenues.
Technology revenues declined to $43.5 million from $46.6 million in the prior-year quarter. The decline in revenues was attributable to lower M&A-related activities and lower demand for litigation services. Adjusted EBITDA came in at $5.6 million compared with $6.0 million in the prior-year quarter driven by lower revenues.
Strategic Communications revenues increased to $50.3 million from $48.8 million in the prior-year quarter, owing to higher project-based revenues in the Europe, Middle East and Africa (EMEA) region. Adjusted EBITDA for the segment was $8.4 million compared with $7.6 million in the prior-year quarter, largely due to higher revenues.
Balance Sheet & Cash Flow
FTI Consulting had cash and cash equivalents of $216.2 million at Dec 31, 2016, compared with $149.8 million in the year-ago period. Total debt was $365.5 million at year-end 2016, down from $494.8 million at Dec 31, 2015. Net cash provided by operating activities in 2016 was $233.5 million compared with $139.9 million in the year-ago period.
The company repurchased 537,400 shares in 2016 at an average price of $39.97 per share for $21.5 million. At the year end, FTI Consulting had approximately $81.4 million worth of shares available under its $100.0 million share repurchase authorization.
Guidance
For 2017, the company expects revenues to be approximately $1.80–$1.90 billion. GAAP earnings are expected to be within $1.95–$2.30 per share, while adjusted earnings per share are likely to be in the range of $2.10–$2.40.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 13% due to these changes.
FTI Consulting, Inc. Price and Consensus
FTI Consulting, Inc. Price and Consensus | FTI Consulting, Inc. Quote
VGM Scores
At this time, FTI Consulting's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 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.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.