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Zacks Industry Outlook Highlights: Gartner, CRA International and FTI Consulting
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For Immediate Release
Chicago, IL – September 20, 2021 – Today, Zacks Equity Research discusses Consulting Services, including Gartner, Inc. (IT - Free Report) , CRA International, Inc. (CRAI - Free Report) and FTI Consulting, Inc. (FCN - Free Report) .
Encouraging manufacturing and service activities along with the accelerated adoption and success of the work-from-home trend are enabling the Zacks Consulting Services industry to support the demand environment that is getting healthier with the gradual economic recovery, driven by the ramped-up vaccination drives.
Service demand, innovation and technology investments are helping Gartner, CRA International and FTI Consulting sail through these testing times.
About the Industry
Companies grouped under the Consulting Services category offer professional advice in management, IT, human resources, environmental regulations, logistics and marketing, real estate, serving multiple end markets. The space includes prominent names such as Accenture and Gartner.
Amid the pandemic, the key focus within the industry is currently on channelizing money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision making. Service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand and targeting end markets, in a bid to position themselves suitably in the post-pandemic era and better utilize the opportunities that the economic rec&am
What's Shaping the Future of the Consulting Services Industry?
Exponential Growth: This multi-billion-dollar industry has witnessed exponential growth since the 2008 financial crisis, enjoying a steady rate of revenues, profit, and cash-flow growth. Consequently, the trend has enabled most industry players to pay out stable dividends.
Pandemic Resiliency: Consulting services is one of the least pandemic-affected industries. This is because, amid such a volatile situation, organizations have increased their search for advice that can help protect their employees, and stay closer to consumers and shareholders. Further, this industry is one of the earliest pioneers of remote working that has now become an integral part of the new normal. The nature of work enables industry players to function efficiently through the increased use of technology.
Non-stop Service Demand: The sector is a major beneficiary of the economy, which is gathering strength on the ongoing mass vaccination program. A steady recovery is evident from the latest second-quarter 2021 GDP number, which according to the "second" estimate released by the Bureau of Economic Analysis, grew at an annual rate of 6.6% compared with the increase of 6.5% in the “advance” estimate and 6.3% in the first quarter.
With both manufacturing and service activities in the pink, the demand for business services is rising steadily. Economic activity in the manufacturing sector inched up 0.4% from July to August, with the Manufacturing PMI measured by the Institute for Supply Management (ISM) touching 59.9% and marking the 15th consecutive month of expansion after April 2020’s contraction.
Although the economic activity in the service sector shrunk 2.4% from July to August with the Services PMI measured by the ISM touching 61.7%, the above 50% reading marked the 15th consecutive month of expansion after a two-month period of contraction in 2020.
Zacks Industry Rank Indicates Bright Prospects
The Consulting Services industry, which is housed within the broader Business Services sector, currently carries a Zacks Industry Rank #22. This rank places it in the top 9% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates stellar near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily pushing their estimates north. Over the past year, the industry’s consensus earnings estimate for 2021 has moved 15.3% north.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry Outperforms the S&P 500 and the Sector
Over the past year, the Consulting Services industry has outperformed the S&P 500 composite and the broader sector.
While the industry has rallied 51.3%, the S&P 500 composite gained 35.1%. The broader sector has declined 20.5% during the said time frame.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is a commonly-used multiple for valuing consulting services companies, we see that the industry is currently trading at 32.57X, above the S&P 500’s 21.53X and the sector’s 30.91X.
Over the past five years, the industry has traded as high as 32.75X, as low as 18.82X and at a median of 22.79X.
We present three stocks that currently carry a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) and are well positioned for near-term growth.
Gartner: The research and advisory giant flaunts a Zacks Rank of 1, at present.
Operating in an industry with low barriers to entry, the company has an integrated research and consulting team designed to best serve client needs. This enables it to have a competitive advantage over its rivals. Over time, Gartner’s research reports have become indispensable tools for diverse companies across different sectors, fortifying its leading position in the market.
The Zacks Consensus Estimate for the current-year EPS has been revised 21.4% upward in the past 60 days. The stock has surged 102.9% in the past year.
CRA International: This global provider of economic, financial, and management consulting services also sports a Zacks Rank #1.
Charles River has a diversified business, with service offerings across areas of functional expertise, client base and geographical regions. Being proficient in multiple industries helps the company meet various client needs and offer other innovative services. The multi-disciplinary set up enables it to bring experts from all fields on a single platform. Diversification in its business helps reduce the company’s dependence on any specific market, industry or geographic area. It also increases the company’s ability to adapt to the changing conditions.
The Zacks Consensus Estimate for the ongoing-year EPS has moved up 18.1% in 60 days’ time. The stock has gained a massive 129.6% over the past year.
FTI Consulting: This business advisory services provider carries a Zacks Rank of 2, at present.
The company’s potential to club diverse issues like damage assessment, accounting, economics, statistics, finance and industry under a single roof looks impressive. FTI Consulting continues to pursue opportunities in areas, such as business transformation services, transaction advisory business, restructuring, retail, construction, data and analytics, cyber business, information governance and international arbitration. This makes it an excellent partner for global clients dealing with international arbitration issues, thereby generating continued revenue growth from the existing international operations.
The Zacks Consensus Estimate for the 2021 EPS has moved 2.1% north in the past 60 days. The stock has appreciated 28.9% over the past year.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights: Gartner, CRA International and FTI Consulting
For Immediate Release
Chicago, IL – September 20, 2021 – Today, Zacks Equity Research discusses Consulting Services, including Gartner, Inc. (IT - Free Report) , CRA International, Inc. (CRAI - Free Report) and FTI Consulting, Inc. (FCN - Free Report) .
Link: https://www.zacks.com/commentary/1797920/3-top-stocks-from-the-flourishing-consulting-services-industry
Encouraging manufacturing and service activities along with the accelerated adoption and success of the work-from-home trend are enabling the Zacks Consulting Services industry to support the demand environment that is getting healthier with the gradual economic recovery, driven by the ramped-up vaccination drives.
Service demand, innovation and technology investments are helping Gartner, CRA International and FTI Consulting sail through these testing times.
About the Industry
Companies grouped under the Consulting Services category offer professional advice in management, IT, human resources, environmental regulations, logistics and marketing, real estate, serving multiple end markets. The space includes prominent names such as Accenture and Gartner.
Amid the pandemic, the key focus within the industry is currently on channelizing money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision making. Service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand and targeting end markets, in a bid to position themselves suitably in the post-pandemic era and better utilize the opportunities that the economic rec&am
What's Shaping the Future of the Consulting Services Industry?
Exponential Growth: This multi-billion-dollar industry has witnessed exponential growth since the 2008 financial crisis, enjoying a steady rate of revenues, profit, and cash-flow growth. Consequently, the trend has enabled most industry players to pay out stable dividends.
Pandemic Resiliency: Consulting services is one of the least pandemic-affected industries. This is because, amid such a volatile situation, organizations have increased their search for advice that can help protect their employees, and stay closer to consumers and shareholders. Further, this industry is one of the earliest pioneers of remote working that has now become an integral part of the new normal. The nature of work enables industry players to function efficiently through the increased use of technology.
Non-stop Service Demand: The sector is a major beneficiary of the economy, which is gathering strength on the ongoing mass vaccination program. A steady recovery is evident from the latest second-quarter 2021 GDP number, which according to the "second" estimate released by the Bureau of Economic Analysis, grew at an annual rate of 6.6% compared with the increase of 6.5% in the “advance” estimate and 6.3% in the first quarter.
With both manufacturing and service activities in the pink, the demand for business services is rising steadily. Economic activity in the manufacturing sector inched up 0.4% from July to August, with the Manufacturing PMI measured by the Institute for Supply Management (ISM) touching 59.9% and marking the 15th consecutive month of expansion after April 2020’s contraction.
Although the economic activity in the service sector shrunk 2.4% from July to August with the Services PMI measured by the ISM touching 61.7%, the above 50% reading marked the 15th consecutive month of expansion after a two-month period of contraction in 2020.
Zacks Industry Rank Indicates Bright Prospects
The Consulting Services industry, which is housed within the broader Business Services sector, currently carries a Zacks Industry Rank #22. This rank places it in the top 9% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates stellar near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily pushing their estimates north. Over the past year, the industry’s consensus earnings estimate for 2021 has moved 15.3% north.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and current valuation.
Industry Outperforms the S&P 500 and the Sector
Over the past year, the Consulting Services industry has outperformed the S&P 500 composite and the broader sector.
While the industry has rallied 51.3%, the S&P 500 composite gained 35.1%. The broader sector has declined 20.5% during the said time frame.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is a commonly-used multiple for valuing consulting services companies, we see that the industry is currently trading at 32.57X, above the S&P 500’s 21.53X and the sector’s 30.91X.
Over the past five years, the industry has traded as high as 32.75X, as low as 18.82X and at a median of 22.79X.
We present three stocks that currently carry a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) and are well positioned for near-term growth.
You can see the complete list of today’s Zacks #1 Rank stocks here.
3 Consulting Services Stocks to Bet On
Gartner: The research and advisory giant flaunts a Zacks Rank of 1, at present.
Operating in an industry with low barriers to entry, the company has an integrated research and consulting team designed to best serve client needs. This enables it to have a competitive advantage over its rivals. Over time, Gartner’s research reports have become indispensable tools for diverse companies across different sectors, fortifying its leading position in the market.
The Zacks Consensus Estimate for the current-year EPS has been revised 21.4% upward in the past 60 days. The stock has surged 102.9% in the past year.
CRA International: This global provider of economic, financial, and management consulting services also sports a Zacks Rank #1.
Charles River has a diversified business, with service offerings across areas of functional expertise, client base and geographical regions. Being proficient in multiple industries helps the company meet various client needs and offer other innovative services. The multi-disciplinary set up enables it to bring experts from all fields on a single platform. Diversification in its business helps reduce the company’s dependence on any specific market, industry or geographic area. It also increases the company’s ability to adapt to the changing conditions.
The Zacks Consensus Estimate for the ongoing-year EPS has moved up 18.1% in 60 days’ time. The stock has gained a massive 129.6% over the past year.
FTI Consulting: This business advisory services provider carries a Zacks Rank of 2, at present.
The company’s potential to club diverse issues like damage assessment, accounting, economics, statistics, finance and industry under a single roof looks impressive. FTI Consulting continues to pursue opportunities in areas, such as business transformation services, transaction advisory business, restructuring, retail, construction, data and analytics, cyber business, information governance and international arbitration. This makes it an excellent partner for global clients dealing with international arbitration issues, thereby generating continued revenue growth from the existing international operations.
The Zacks Consensus Estimate for the 2021 EPS has moved 2.1% north in the past 60 days. The stock has appreciated 28.9% over the past year.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.