It has been about a month since the last earnings report for Navigant Consulting, Inc. . Shares have added about 8.3% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is NCI due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Navigant Misses Q4 Earnings Estimates
Navigant reported lackluster results for fourth-quarter 2017 with year-over-year decline in adjusted earnings and revenues.
Adjusted earnings were $13.8 million or 29 cents per share compared with $14.7 million or 30 cents per share in the prior-year quarter. Adjusted earnings missed the Zacks Consensus Estimate by 11 cents.
Quarter Details
GAAP earnings for the reported quarter were $43.1 million or 91 cents per share compared with $13.5 million or 28 cents per share in the year-earlier quarter. The surge was aided by benefits from the newly enacted tax law. GAAP earnings for full-year 2017 were $75 million or $1.55 per share compared with $58.1 million or $1.19 per share in the previous year.
Total revenues for the quarter were $255.4 million compared with $266.1 million in the prior-year period. Revenues before reimbursements (RBR) were $230.7 million compared with $239.7 million in the prior-year period. Decrease in revenues across all business segments resulted in this decline. RBR missed the Zacks Consensus Estimate of $244 million. Revenues for full year 2017 were $1,032.3 million compared with $1,034.5 million of the previous year.
Adjusted EBITDA was $32.3 million, down from $34.8 million in the prior-year quarter largely due to lower revenues.
Segment Performance
RBR for the Healthcare segment — which is one of the biggest revenue generating business of the company — decreased to $89.7 million from $91.7 million in the prior-year quarter. Discrepancies in timing and sequencing when entering long-term contracts with clients have resulted in this decline.
The Energy segment’s RBR decreased year over year to $30.7 million from $31.3 million in the reported quarter. The poor performance of this sector was caused by a decrease in activity from U.S. federal government engagements.
The Disputes, Forensics & Legal Technology (earlier known as Disputes, Investigations & Economics) segment’s RBR fell year over year to $74.6 million from $78.4 million due to decline in processing activities in the legal technology solutions business.
The Financial, Risk & Compliance Advisory segment’s RBR declined year over year to $35.7 million from $38.3 million in the prior-year quarter. This segment was adversely impacted by regulatory uncertainty and the conclusion of some large engagements at the end of the previous year.
Balance Sheet and Cash Flow
As of Dec 31, 2017, Navigant had cash and cash equivalents of about $8.4 million compared with $8.3 million a year ago. Bank debt was $133 million compared with $135 million in the year-ago period. Leverage (bank debt divided by trailing 12-month adjusted EBITDA) was 1.06 as of Dec 31, 2017, compared with 0.95 as of Dec 31, 2016.
For the quarter, net cash provided by operating activities was $70.7 million compared with $54.4 million in the year-ago quarter bringing the total tally for the year to $104.2 million and $110 million, respectively. Free cash flow increased to $24.6 million from $7.9 million in the prior-year quarter. Navigant repurchased shares worth $43.00 million at an average price of $18.52 per share in 2017. Of this, shares of about $15.00 million were repurchased at an average price of $17.89 per share in the fourth-quarter of 2017.
Full year 2018 Guidance
The company projects revenues to lie between $1.030 billion and $1.065 billion while RBR is expected to be $940-$975 million. Adjusted EBITDA is expected in the range of $125 million to $137 million while adjusted earnings per share are expected in the band of $1.26-$1.44. Free cash flow is expected to be between $75 million and $90 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter
VGM Scores
At this time, NCI has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Interestingly, NCI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Navigant (NCI) Up 8.3% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Navigant Consulting, Inc. . Shares have added about 8.3% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is NCI due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Navigant Misses Q4 Earnings Estimates
Navigant reported lackluster results for fourth-quarter 2017 with year-over-year decline in adjusted earnings and revenues.
Adjusted earnings were $13.8 million or 29 cents per share compared with $14.7 million or 30 cents per share in the prior-year quarter. Adjusted earnings missed the Zacks Consensus Estimate by 11 cents.
Quarter Details
GAAP earnings for the reported quarter were $43.1 million or 91 cents per share compared with $13.5 million or 28 cents per share in the year-earlier quarter. The surge was aided by benefits from the newly enacted tax law. GAAP earnings for full-year 2017 were $75 million or $1.55 per share compared with $58.1 million or $1.19 per share in the previous year.
Total revenues for the quarter were $255.4 million compared with $266.1 million in the prior-year period. Revenues before reimbursements (RBR) were $230.7 million compared with $239.7 million in the prior-year period. Decrease in revenues across all business segments resulted in this decline. RBR missed the Zacks Consensus Estimate of $244 million. Revenues for full year 2017 were $1,032.3 million compared with $1,034.5 million of the previous year.
Adjusted EBITDA was $32.3 million, down from $34.8 million in the prior-year quarter largely due to lower revenues.
Segment Performance
RBR for the Healthcare segment — which is one of the biggest revenue generating business of the company — decreased to $89.7 million from $91.7 million in the prior-year quarter. Discrepancies in timing and sequencing when entering long-term contracts with clients have resulted in this decline.
The Energy segment’s RBR decreased year over year to $30.7 million from $31.3 million in the reported quarter. The poor performance of this sector was caused by a decrease in activity from U.S. federal government engagements.
The Disputes, Forensics & Legal Technology (earlier known as Disputes, Investigations & Economics) segment’s RBR fell year over year to $74.6 million from $78.4 million due to decline in processing activities in the legal technology solutions business.
The Financial, Risk & Compliance Advisory segment’s RBR declined year over year to $35.7 million from $38.3 million in the prior-year quarter. This segment was adversely impacted by regulatory uncertainty and the conclusion of some large engagements at the end of the previous year.
Balance Sheet and Cash Flow
As of Dec 31, 2017, Navigant had cash and cash equivalents of about $8.4 million compared with $8.3 million a year ago. Bank debt was $133 million compared with $135 million in the year-ago period. Leverage (bank debt divided by trailing 12-month adjusted EBITDA) was 1.06 as of Dec 31, 2017, compared with 0.95 as of Dec 31, 2016.
For the quarter, net cash provided by operating activities was $70.7 million compared with $54.4 million in the year-ago quarter bringing the total tally for the year to $104.2 million and $110 million, respectively. Free cash flow increased to $24.6 million from $7.9 million in the prior-year quarter. Navigant repurchased shares worth $43.00 million at an average price of $18.52 per share in 2017. Of this, shares of about $15.00 million were repurchased at an average price of $17.89 per share in the fourth-quarter of 2017.
Full year 2018 Guidance
The company projects revenues to lie between $1.030 billion and $1.065 billion while RBR is expected to be $940-$975 million. Adjusted EBITDA is expected in the range of $125 million to $137 million while adjusted earnings per share are expected in the band of $1.26-$1.44. Free cash flow is expected to be between $75 million and $90 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher 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, NCI has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Interestingly, NCI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.