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Should Value Investors Pick FTI Consulting (FCN) Stock Now?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put FTI Consulting, Inc. (FCN - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, FTI Consulting has a trailing twelve months PE ratio of 20, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.3. If we focus on the long-term PE trend, FTI Consulting’s current PE level puts it slightly above its midpoint over the past five years.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the sector’s trailing twelve months PE ratio, which stands at 33.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that FTI Consulting has a forward PE ratio (price relative to this year’s earnings) of just 21.3, which is higher than the current level. So, it is fair to expect an increase in the company’s share price in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, FTI Consulting has a P/S ratio of about 1.8. This is noticeably lower than the S&P 500’s average of 5.1. However, as we can see in the chart below, this is slightly above the highs for this stock in particular over the past few years.
Image Source: Zacks Investment Research
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, FTI Consulting currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes FTI Consulting a solid choice for value investors.
What About the Stock Overall?
Though FTI Consulting might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of C. This gives FCN a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at its best. The current quarter has seen zero estimates go up and one estimate go down in the past sixty days, while the full year have seen two estimates go higher and none go down.
This has caused the consensus estimate for the current quarter to decline by 4.1% and full year estimate has risen by 2.1% in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
The stock holds a Zacks Rank #3 (Hold), which indicates that while analysts have some apprehensions about the stock in the immediate future, the stock’s growth story might be good over the long term. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
FTI Consulting is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (top 6%) further supports the growth potential of the stock. However, with a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past year, the sector has clearly underperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Should Value Investors Pick FTI Consulting (FCN) Stock Now?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put FTI Consulting, Inc. (FCN - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, FTI Consulting has a trailing twelve months PE ratio of 20, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.3. If we focus on the long-term PE trend, FTI Consulting’s current PE level puts it slightly above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the sector’s trailing twelve months PE ratio, which stands at 33.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that FTI Consulting has a forward PE ratio (price relative to this year’s earnings) of just 21.3, which is higher than the current level. So, it is fair to expect an increase in the company’s share price in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, FTI Consulting has a P/S ratio of about 1.8. This is noticeably lower than the S&P 500’s average of 5.1. However, as we can see in the chart below, this is slightly above the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, FTI Consulting currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes FTI Consulting a solid choice for value investors.
What About the Stock Overall?
Though FTI Consulting might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of C. This gives FCN a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at its best. The current quarter has seen zero estimates go up and one estimate go down in the past sixty days, while the full year have seen two estimates go higher and none go down.
This has caused the consensus estimate for the current quarter to decline by 4.1% and full year estimate has risen by 2.1% in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
FTI Consulting, Inc. Price and Consensus
FTI Consulting, Inc. price-consensus-chart | FTI Consulting, Inc. Quote
The stock holds a Zacks Rank #3 (Hold), which indicates that while analysts have some apprehensions about the stock in the immediate future, the stock’s growth story might be good over the long term. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
FTI Consulting is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (top 6%) further supports the growth potential of the stock. However, with a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past year, the sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.