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CRAI or FCN: Which is the Better Stock Post Q4 Earnings?

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The earnings season is at its tail end with about 398 S&P 500 companies having reported results till Feb 16, 2018. Various analysis and comparisons are being done by industry peers to gauge the underlying metrics and relative performance. Let us perform a similar analysis of two leading players in the Business Services sector to pick the best investment option based on the fourth-quarter 2017 earnings scorecard.

Fourth-Quarter Earnings

CRA International, Inc. (CRAI - Free Report) reported strong results with robust year-over-year increase in revenues and adjusted earnings. Adjusted earnings were $5.9 million or 70 cents per share compared with $2.1 million or 24 cents in the year-earlier quarter. The substantial year-over-year increase in adjusted earnings was aided by a strong rise in revenues and favorable tax act. The bottom line comfortably surpassed the Zacks Consensus Estimate of 34 cents.

Non-GAAP revenues came in at $97 million compared with $79.6 million in the year-ago quarter. It surpassed the Zacks Consensus Estimate of $90 million. The rise was driven primarily by broad-based revenue growth in its Energy, Forensic Services, Life Sciences and Marakon Practices and strong contributions by its Antitrust & Competition Economics practice. International operations showed substantial growth with North American operations reflecting nearly 15% rise and European operations growing more than 50% year over year. CRA International sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FTI Consulting, Inc. (FCN - Free Report) reported solid results with healthy year-over-year increase in earnings and revenues. Adjusted earnings were $29.2 million or 78 cents per share compared with $9.9 million or 24 cents in the year-earlier quarter. The bottom line comfortably surpassed the Zacks Consensus Estimate of 50 cents.

Total quarterly revenues came in at $467.7 million compared with $441.9 million in the year-ago quarter. The reported revenues outpaced the Zacks Consensus Estimate of $452 million. Higher segmental revenues from Corporate Finance & Restructuring, and Forensic and Litigation Consulting led to the increase. FTI Consulting sports a Zacks Rank #1.

Guidance

Concurrent with the earnings release, CRA International provided bullish outlook for 2018. For full-year 2018, the company expects revenues to lie between $380 million and $392 million and non-GAAP EBITDA margin to be 8.8-9.8%.

For 2018, FTI Consulting expects revenues to be in the range of $1.83-$1.88 billion. Also, earnings are projected to lie between $2.35 and $2.65 per share for the same time period.

Price Performance

In the last three months, CRA International has outperformed the industry with an average return of 13.3% compared with a gain of 8.5% for the latter. FTI Consulting has outperformed the industry with an average return of 15.9% during the same time frame.



Estimate Revisions

Post earnings release, CRA International’s current-quarter estimates were raised to 50 cents per share from 41 cents while that for the current year jumped from $1.80 to $2.15.

FTI Consulting’s current-quarter estimates were revised to 65 cents per share from 55 cents post fourth-quarter earnings release while that for the current year increased from $2.22 to $2.38.

To Sum Up

Based on the current scenario, although there is not much to choose from as the stocks seem to match on most counts, CRA International seems to have trumped FTI Consulting on the basis of positive estimate revisions while marginally falling behind in price performance. Consequently, both the stocks seem to be on par in terms of healthy investment propositions.

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