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Navigant (NCI) Up 18.6% Since Earnings Report: Can It Continue?
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More than a month has gone by since the last earnings report for Navigant Consulting, Inc. (NCI - Free Report) . Shares have added about 18.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 Misses on Q3 Earnings, Reiterates Guidance
Navigant reported lackluster third-quarter 2017 results with adjusted earnings per share of 30 cents compared with 37 cents in the prior-year quarter. Adjusted earnings missed the Zacks Consensus Estimate by a penny. Adjusted net income in the reported quarter declined to $14.2 million from $18.1 million in the year-ago quarter owing to higher operating expenses.
GAAP earnings for the reported quarter were $11.9 million or 25 cents per share compared with $17.2 million or 35 cents per share in the year-earlier quarter.
Total revenues for the quarter were $262.3 million compared with $261.4 million in the prior-year period. Revenues before reimbursements (RBR) increased 1% year over year to approximately $237.5 million and missed the Zacks Consensus Estimate of $240 million. Adjusted EBITDA was $32.9 million, down 17% from $39.8 million for the same period in 2016 largely due to high operating expenses.
Segment Performance
RBR for the Healthcare segment, which turned out to be one of the strongest performers this quarter, increased 5.3% year over year to $95.9 million. The improvement was driven by strong demand for large, strategy-led transformation projects and demand for commercialization solutions from life sciences companies.
The Energy segment’s RBR improved 4.1% year over year to $29.6 million in the reported quarter. The growth was driven by contributions from the acquisition of Ecofys. Operating profit for the segment decreased 3.1% year over year to $8.1 million.
The Disputes, Forensics & Legal Technology (earlier known as Disputes, Investigations & Economics) segment’s RBR decreased 4.3% year over year to $74 million. The decrease in RBR was primarily attributable to lower processing activities.
The Financial, Risk & Compliance Advisory segment’s RBR declined 5.6% year over year to $38 million in the quarter. Operating profit for the segment was down 9.9% year over year to $15.9 million due to unfavorable project mix.
Balance Sheet and Cash Flow
As of Sep 30, 2017, Navigant had cash and cash equivalents of about $9 million. At quarter end, bank debt was $176.7 million, compared with $161.2 million in the year-ago period. Leverage ratio was 1.38x as of Sep 30, 2017, compared with 1.17x as of Sep 30, 2016.
For the quarter, net cash provided by operating activities was $35.2 million, compared with $48 million in the year-ago quarter. Free cash flow decreased to $14.2 million for third-quarter 2017 from $25.5 million in the prior-year quarter due to higher capital expenses and lower profitability. Navigant repurchased 840,735 shares for approximately $14.1 million at an average cost of $16.72 per share.
Guidance Affirmed
Full year 2017, the company continues to expect RBR in the range $955–$980 million. Total revenues are expected to be in the range of $1.04–$1.07 billion. Adjusted EBITDA is continued to be expected to be in the range of $135–$145 million, while adjusted EPS is expected to be in the range of $1.19–$1.29.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. While looking back an additional 30 days, we can see even more upward momentum. There has been two moves up in the last two months.
At this time, Navigant's stock has an average Growth Score of C, though it is doing a bit better on the momentum front with a B. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth and momentum investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of this revision has been 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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Navigant (NCI) Up 18.6% Since Earnings Report: Can It Continue?
More than a month has gone by since the last earnings report for Navigant Consulting, Inc. (NCI - Free Report) . Shares have added about 18.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 Misses on Q3 Earnings, Reiterates Guidance
Navigant reported lackluster third-quarter 2017 results with adjusted earnings per share of 30 cents compared with 37 cents in the prior-year quarter. Adjusted earnings missed the Zacks Consensus Estimate by a penny. Adjusted net income in the reported quarter declined to $14.2 million from $18.1 million in the year-ago quarter owing to higher operating expenses.
GAAP earnings for the reported quarter were $11.9 million or 25 cents per share compared with $17.2 million or 35 cents per share in the year-earlier quarter.
Total revenues for the quarter were $262.3 million compared with $261.4 million in the prior-year period. Revenues before reimbursements (RBR) increased 1% year over year to approximately $237.5 million and missed the Zacks Consensus Estimate of $240 million. Adjusted EBITDA was $32.9 million, down 17% from $39.8 million for the same period in 2016 largely due to high operating expenses.
Segment Performance
RBR for the Healthcare segment, which turned out to be one of the strongest performers this quarter, increased 5.3% year over year to $95.9 million. The improvement was driven by strong demand for large, strategy-led transformation projects and demand for commercialization solutions from life sciences companies.
The Energy segment’s RBR improved 4.1% year over year to $29.6 million in the reported quarter. The growth was driven by contributions from the acquisition of Ecofys. Operating profit for the segment decreased 3.1% year over year to $8.1 million.
The Disputes, Forensics & Legal Technology (earlier known as Disputes, Investigations & Economics) segment’s RBR decreased 4.3% year over year to $74 million. The decrease in RBR was primarily attributable to lower processing activities.
The Financial, Risk & Compliance Advisory segment’s RBR declined 5.6% year over year to $38 million in the quarter. Operating profit for the segment was down 9.9% year over year to $15.9 million due to unfavorable project mix.
Balance Sheet and Cash Flow
As of Sep 30, 2017, Navigant had cash and cash equivalents of about $9 million. At quarter end, bank debt was $176.7 million, compared with $161.2 million in the year-ago period. Leverage ratio was 1.38x as of Sep 30, 2017, compared with 1.17x as of Sep 30, 2016.
For the quarter, net cash provided by operating activities was $35.2 million, compared with $48 million in the year-ago quarter. Free cash flow decreased to $14.2 million for third-quarter 2017 from $25.5 million in the prior-year quarter due to higher capital expenses and lower profitability. Navigant repurchased 840,735 shares for approximately $14.1 million at an average cost of $16.72 per share.
Guidance Affirmed
Full year 2017, the company continues to expect RBR in the range $955–$980 million. Total revenues are expected to be in the range of $1.04–$1.07 billion. Adjusted EBITDA is continued to be expected to be in the range of $135–$145 million, while adjusted EPS is expected to be in the range of $1.19–$1.29.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. While looking back an additional 30 days, we can see even more upward momentum. There has been two moves up in the last two months.
Navient Corporation Price and Consensus
Navient Corporation Price and Consensus | Navient Corporation Quote
VGM Scores
At this time, Navigant's stock has an average Growth Score of C, though it is doing a bit better on the momentum front with a B. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth and momentum investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of this revision has been 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.