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Here's Why You Should Hold on to FTI Consulting (FCN) Stock

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FTI Consulting, Inc. (FCN - Free Report) has had an impressive run on the bourse year to date. The stock has gained 23.4%, significantly outperforming the 10.6% growth of the industry it belongs to.

The company’s earnings for 2021 and 2022 are expected to grow 3% and 17.9% year over year, respectively.

Factors That Auger Well

Increased regulatory scrutiny and corporate litigation are likely to spur demand for FTI Consulting’s products. Additionally, structural change has become a necessity in the rapidly evolving global market as management teams look to fend off rivals, protect intellectual property rights and transform businesses via M&A, divestiture and other restructuring activities. These developments call for FTI Consulting’s specialized skill sets, helping it to maintain continued revenue growth.

The company’s key strengths include a broad range of practices and services, well-diversified revenue streams, strong client relationships, specialized industry expertise, global reach, and a successful record of serving clients as a trusted advisor. It continues to pursue opportunities in areas such as business transformation services, transaction advisory business, restructuring, retail, construction, data and analytics, cyber business, information governance and international arbitration.

Debt Woe Stays

FTI Consulting’s total debt to total capital ratio was 0.25 at the end of first-quarter 2021, higher than the previous quarter’s 0.17. An increasing debt to capitalization ratio indicates that the proportion of debt to finance the company’s assets has increased and so is the risk of insolvency.

Further, cash and cash equivalent balance of $233 million at the end of the quarter was far below the long-term debt of $459 million, underscoring that the company doesn’t have enough cash to meet this debt burden.

Zacks Rank and Stocks to Consider

FTI Consultingcurrently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Equifax (EFX - Free Report) , Cross Country Healthcare (CCRN - Free Report) and Charles River Associates (CRAI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Equifax,Cross Country Healthcare and Charles River is pegged at 14%, 10.5% and 15.5%, respectively.

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