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Will Higher Revenues Aid FTI Consulting's (FCN) Q4 Earnings?

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FTI Consulting, Inc. (FCN - Free Report) is scheduled to report fourth-quarter 2017 results before the opening bell on Feb 22.

The company has beaten estimates once in the trailing four quarters with negative average earnings surprise of 12.3%. Last quarter, the company generated revenues of $449 million, meeting the Zacks Consensus Estimate.

Let’s see how things are shaping up for this announcement.

Factors at Play

Restructuring for companies have become a necessity in today’s rapidly evolving global markets as management teams look to fend off rivals, protect intellectual property rights and transform businesses via M&A, divestiture and other restructuring activities. FTI Consulting’s specialized skill sets are highly suitable for such requirements which are likely to boost its revenues.

Moreover, the company has made significant investments in technology and made acquisitions in many high-growth segments which are likely to fuel its growth.

Top-Line Expansion

The Zacks Consensus Estimate for FTI Consulting’s fourth-quarter revenues is $452 million, higher than reported revenues of $442 million in the prior-year quarter.

The Corporate Finance & Restructuring segment is expected to generate $131 million which is higher than the revenues of $113.4 million reported in the prior-year quarter. The Forensic and Litigation Consulting segment is expected to generate $120 million, higher than the year-ago figure of $105.5 million. This rise is expected to be driven by higher demand for forensic accounting and advisory services, and construction solutions offerings.

The Economic Consulting segment is expected to generate $114 million, a fall from the reported figure of $129.3 million in the prior-year quarter. This decline may be caused by a decreased demand for antitrust services in North America. Also, the Technology segment is expected to generate $42.7 million, a decrease from the reported figure of $43.5 million in the year-ago quarter. Lastly, the Strategic Communications segment is expected to generate $51 million, higher than $50.3 million reported a year ago.

Earnings Whispers

Our proven model conclusively shows that FTI Consulting is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is perfectly the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +12.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

FTI Consulting, Inc. Price and EPS Surprise
 

Zacks Rank: FTI Consulting has a Zacks Rank #3. This increases the predictive power of ESP and makes us reasonably confident of an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Other Stocks to Consider    

Here are some other companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Sonic Automotive, Inc. (SAH - Free Report) has an Earnings ESP of +2.42% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Magna International Inc. (MGA - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank #3.

Workday, Inc. (WDAY - Free Report) has an Earnings ESP of +2.37% and a Zacks Rank #3.

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