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Why Is Navigant (NCI) Down 7.4% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Navigant Consulting, Inc. (NCI - Free Report) . Shares have lost about 7.4% 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.
Navigant Beats Q1 Earnings, Revenue Miss
Navigant reported adjusted earnings per share (EPS) of $0.27 in first-quarter 2017, same as the prior-year quarter. Adjusted earnings marginally beat the Zacks Consensus Estimate of $0.26.
Total revenue for the quarter was $257.8 million compared with $245.3 million in the prior-year period. Revenues before reimbursements (RBR) increased 5.7% year over year to approximately $236.2 million. Revenue missed the Zacks Consensus Estimate of $242 million. Revenues increased due to strong demand in Healthcare and Energy Segments.
Adjusted EBITDA was $31.5 million, up 2.9% from $30.6 million in the prior-year quarter.
Segmental Performance
RBR for the Healthcare segment, which turned out to be one of the strongest performers this quarter, increased 10.9% year over year to $90.5 million. The improvement was driven by strong demand for large, strategy-led transformation projects.
The Energy segment’s RBR saw growth of 20.8% year over year to $32.5 million in the reported quarter. The growth was primarily driven by contributions from the Ecofys acquisition. The segment’s operating profit margin was 27.3% compared with 25% in the year-ago quarter.
The Disputes, Forensics & Legal Technology (earlier known as Disputes, Investigations & Economics) segment’s RBR decreased 1.2% year over year to $80.3 million. The rise was primarily driven by the continued strong demand for its global expertise in complex industrial, infrastructure and commercial project matters and an increase in performance-based fees associated with mass tort claims work, partially offset by currency fluctuations. Segmental operating margin decreased to 32.8% from 35.3%.
The Financial, Risk & Compliance Advisory segment’s RBR were down 2.2% year over year to $32.9 million in the quarter. Operating profit margin for the segment decreased to 35.3% from 40.1% in the year-earlier quarter due to higher RBR.
Balance Sheet and Cash Flow
As of Mar 31, 2017, Navigant had cash and cash equivalents of about $9.1 million, while bank debt was $178.3 million compared with $211.5 million at March 31, 2016.
For the quarter, net cash used in operating activities was $23 million, compared with $26.6 million in the year-ago quarter. Free cash flow decreased to $13.3 million compared with $21 million in the year ago quarter, primarily driven by increased capital expenditures due to the relocation of its Chicago headquarters. Navigant repurchased 207,298 shares during the first quarter at an aggregate cost of $5 million and an average cost of $23.93 per share.
Outlook Reiterated
Navigant reiterated its guidance for full-year 2017. RBR is expected to range between $975 million to $1 billion while total revenue is expected to be around $1.1 billion. Adjusted EBITDA for the full year is expected to be in the range of $145−$156 million and adjusted EPS is estimated to be between $1.29 and $1.36.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
At this time, the stock has a subpar Growth Score of 'D', while Momentum is doing a bit better with a 'C'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is more suitable for value investors than momentum investors.
Outlook
While estimates have been moving upward/downward, the magnitude of the revision is net zero. The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
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Why Is Navigant (NCI) Down 7.4% Since the Last Earnings Report?
A month has gone by since the last earnings report for Navigant Consulting, Inc. (NCI - Free Report) . Shares have lost about 7.4% 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.
Navigant Beats Q1 Earnings, Revenue Miss
Navigant reported adjusted earnings per share (EPS) of $0.27 in first-quarter 2017, same as the prior-year quarter. Adjusted earnings marginally beat the Zacks Consensus Estimate of $0.26.
Total revenue for the quarter was $257.8 million compared with $245.3 million in the prior-year period. Revenues before reimbursements (RBR) increased 5.7% year over year to approximately $236.2 million. Revenue missed the Zacks Consensus Estimate of $242 million. Revenues increased due to strong demand in Healthcare and Energy Segments.
Adjusted EBITDA was $31.5 million, up 2.9% from $30.6 million in the prior-year quarter.
Segmental Performance
RBR for the Healthcare segment, which turned out to be one of the strongest performers this quarter, increased 10.9% year over year to $90.5 million. The improvement was driven by strong demand for large, strategy-led transformation projects.
The Energy segment’s RBR saw growth of 20.8% year over year to $32.5 million in the reported quarter. The growth was primarily driven by contributions from the Ecofys acquisition. The segment’s operating profit margin was 27.3% compared with 25% in the year-ago quarter.
The Disputes, Forensics & Legal Technology (earlier known as Disputes, Investigations & Economics) segment’s RBR decreased 1.2% year over year to $80.3 million. The rise was primarily driven by the continued strong demand for its global expertise in complex industrial, infrastructure and commercial project matters and an increase in performance-based fees associated with mass tort claims work, partially offset by currency fluctuations. Segmental operating margin decreased to 32.8% from 35.3%.
The Financial, Risk & Compliance Advisory segment’s RBR were down 2.2% year over year to $32.9 million in the quarter. Operating profit margin for the segment decreased to 35.3% from 40.1% in the year-earlier quarter due to higher RBR.
Balance Sheet and Cash Flow
As of Mar 31, 2017, Navigant had cash and cash equivalents of about $9.1 million, while bank debt was $178.3 million compared with $211.5 million at March 31, 2016.
For the quarter, net cash used in operating activities was $23 million, compared with $26.6 million in the year-ago quarter. Free cash flow decreased to $13.3 million compared with $21 million in the year ago quarter, primarily driven by increased capital expenditures due to the relocation of its Chicago headquarters. Navigant repurchased 207,298 shares during the first quarter at an aggregate cost of $5 million and an average cost of $23.93 per share.
Outlook Reiterated
Navigant reiterated its guidance for full-year 2017. RBR is expected to range between $975 million to $1 billion while total revenue is expected to be around $1.1 billion. Adjusted EBITDA for the full year is expected to be in the range of $145−$156 million and adjusted EPS is estimated to be between $1.29 and $1.36.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
Navigant Consulting, Inc. Price and Consensus
Navigant Consulting, Inc. Price and Consensus | Navigant Consulting, Inc. Quote
VGM Scores
At this time, the stock has a subpar Growth Score of 'D', while Momentum is doing a bit better with a 'C'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is more suitable for value investors than momentum investors.
Outlook
While estimates have been moving upward/downward, the magnitude of the revision is net zero. The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.