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FTI Consulting, Inc. (FCN - Free Report) delivered mixed third-quarter 2020 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
The stock declined 7.9% since the earnings release as guidance for 2020 was weak.
Adjusted EPS is now expected in the range of $5.25-$5.75 compared with the previous guidance of $5.50-$6.00. The midpoint of the guidance ($5.5 per share) is below the Zacks Consensus Estimate of $5.66 per share. Revenues for 2020 are expected between $2.42 billion to $2.47 billion, compared with the prior guidance of $2.45 billion to $2.55 billion. The Zacks Consensus Estimate stands at $2.47 billion.
Quarterly adjusted earnings per share of $1.54 (excluding 19 cents from non-recurring item) surpassed the Zacks Consensus Estimate by 12.4% but declined 5.5% on a year-over-year basis. The bottom line was negatively impacted by a 15.8% increase in billable headcount, partially offset by decline in selling, general and administrative expenses, and higher revenues.
Total revenues of $622.3 million missed consensus mark by a slight margin and increased 4.9% on a year-over-year basis. This increase was driven by higher demand in the Corporate Finance & Restructuring segment, partially offset by lower demand in the Forensic and Litigation Consulting, and Strategic Communications segments.
Notably, FTI Consulting’s shares have declined 8.7% in the past year against 12.8% growth of the industry it belongs to.
Revenues by Segment
Corporate Finance & Restructuring’s revenues jumped 23.4% year over year to $236.6 million. The upside was driven by solid demand for restructuring services. The segment contributed 38% to total revenues.
Forensic and Litigation Consulting’s revenues declined 16.5% year over year to $119.1 million. The decrease in revenues was primarily due to lower demand for disputes and investigations services. The segment contributed 19% to total revenues.
Strategic Communications’ revenues declined 11.7% year over year to $53 million. This downtick was due to a $2.3-million decline in pass-through revenues and lower demand for corporate reputation and financial communications services. The segment contributed 9% to total revenues.
Technology’s revenues increased 2.6% year over year to $58.6 million. The upside resulted from higher demand for global cross-border investigation and litigation services. The segment contributed 9% to total revenues.
Economic Consulting’s revenues were up 9.4% year over year to $155 million. The growth was due to higher demand and realized bill rates for merger and acquisition (M&A)-related antitrust services, partially offset by lower-realized bill rates for non-M&A-related antitrust services. The segment contributed 25% to total revenues.
FTI Consulting, Inc. Price, Consensus and EPS Surprise
Adjusted EBITDA was $90.9 million, down 1.5% on a year-over-year basis. Adjusted EBITDA margin contracted 100 basis points year over year to 14.6%.
Balance Sheet and Cash Flow
FTI Consulting exited the quarter with cash and cash equivalents of $304.7 million compared with the prior quarter’s $304.2 million. Long-term debt was $308.5 million compared with $315.8 million witnessed at the end of the previous quarter. The company generated $111.6 million of net cash from operating activities and CapEx was $11.8 million. It spent $82.9 million to repurchase 749,315 shares during this period.
FTI Consulting currently carries a Zacks Rank #5 (Strong Sell).
Recent Performance Some Business Services Companies
Equifax Inc. (EFX - Free Report) reported third-quarter 2020 adjusted earnings of $1.87 per share that beat the Zacks Consensus Estimate by 16.2% and improved 26.4% on a year-over-year basis. Revenues of $1.07 billion outpaced the consensus estimate by 5.9% and improved 22% year over year.
ManpowerGroup Inc. (MAN - Free Report) reported third-quarter 2020 earnings of $1.12 per share, beating the consensus mark by 90.5% but declining more than 37.5% year over year. Revenues of $4.58 billion surpassed the consensus mark by 8.7% but declined 12.7% year over year.
IHS Markit Ltd. recorded third-quarter fiscal 2020 adjusted earnings per share of 77 cents that surpassed the consensus estimate by 11.6% and increased 15% on a year-over-year basis. Total revenues came in at $1.07 billion, marginally surpassing the consensus mark but declining 4% from the year-ago quarter.
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FTI Consulting (FCN) Q3 Earnings Beat Estimates, Decline Y/Y
FTI Consulting, Inc. (FCN - Free Report) delivered mixed third-quarter 2020 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
The stock declined 7.9% since the earnings release as guidance for 2020 was weak.
Adjusted EPS is now expected in the range of $5.25-$5.75 compared with the previous guidance of $5.50-$6.00. The midpoint of the guidance ($5.5 per share) is below the Zacks Consensus Estimate of $5.66 per share. Revenues for 2020 are expected between $2.42 billion to $2.47 billion, compared with the prior guidance of $2.45 billion to $2.55 billion. The Zacks Consensus Estimate stands at $2.47 billion.
Quarterly adjusted earnings per share of $1.54 (excluding 19 cents from non-recurring item) surpassed the Zacks Consensus Estimate by 12.4% but declined 5.5% on a year-over-year basis. The bottom line was negatively impacted by a 15.8% increase in billable headcount, partially offset by decline in selling, general and administrative expenses, and higher revenues.
Total revenues of $622.3 million missed consensus mark by a slight margin and increased 4.9% on a year-over-year basis. This increase was driven by higher demand in the Corporate Finance & Restructuring segment, partially offset by lower demand in the Forensic and Litigation Consulting, and Strategic Communications segments.
Notably, FTI Consulting’s shares have declined 8.7% in the past year against 12.8% growth of the industry it belongs to.
Revenues by Segment
Corporate Finance & Restructuring’s revenues jumped 23.4% year over year to $236.6 million. The upside was driven by solid demand for restructuring services. The segment contributed 38% to total revenues.
Forensic and Litigation Consulting’s revenues declined 16.5% year over year to $119.1 million. The decrease in revenues was primarily due to lower demand for disputes and investigations services. The segment contributed 19% to total revenues.
Strategic Communications’ revenues declined 11.7% year over year to $53 million. This downtick was due to a $2.3-million decline in pass-through revenues and lower demand for corporate reputation and financial communications services. The segment contributed 9% to total revenues.
Technology’s revenues increased 2.6% year over year to $58.6 million. The upside resulted from higher demand for global cross-border investigation and litigation services. The segment contributed 9% to total revenues.
Economic Consulting’s revenues were up 9.4% year over year to $155 million. The growth was due to higher demand and realized bill rates for merger and acquisition (M&A)-related antitrust services, partially offset by lower-realized bill rates for non-M&A-related antitrust services. The segment contributed 25% to total revenues.
FTI Consulting, Inc. Price, Consensus and EPS Surprise
FTI Consulting, Inc. price-consensus-eps-surprise-chart | FTI Consulting, Inc. Quote
Operating Results
Adjusted EBITDA was $90.9 million, down 1.5% on a year-over-year basis. Adjusted EBITDA margin contracted 100 basis points year over year to 14.6%.
Balance Sheet and Cash Flow
FTI Consulting exited the quarter with cash and cash equivalents of $304.7 million compared with the prior quarter’s $304.2 million. Long-term debt was $308.5 million compared with $315.8 million witnessed at the end of the previous quarter. The company generated $111.6 million of net cash from operating activities and CapEx was $11.8 million. It spent $82.9 million to repurchase 749,315 shares during this period.
FTI Consulting currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performance Some Business Services Companies
Equifax Inc. (EFX - Free Report) reported third-quarter 2020 adjusted earnings of $1.87 per share that beat the Zacks Consensus Estimate by 16.2% and improved 26.4% on a year-over-year basis. Revenues of $1.07 billion outpaced the consensus estimate by 5.9% and improved 22% year over year.
ManpowerGroup Inc. (MAN - Free Report) reported third-quarter 2020 earnings of $1.12 per share, beating the consensus mark by 90.5% but declining more than 37.5% year over year. Revenues of $4.58 billion surpassed the consensus mark by 8.7% but declined 12.7% year over year.
IHS Markit Ltd. recorded third-quarter fiscal 2020 adjusted earnings per share of 77 cents that surpassed the consensus estimate by 11.6% and increased 15% on a year-over-year basis. Total revenues came in at $1.07 billion, marginally surpassing the consensus mark but declining 4% from the year-ago quarter.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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