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Navigant Hits 52-Week High on Ecofys Buyout & Bullish View

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Shares of Navigant Consulting Inc. (NCI - Free Report) hit a 52-week high of $24.96 on Nov 21, closing a notch lower at $24.85, reflecting a solid year-to-date return of 54.7%. Despite the strong price appreciation, this Zacks Rank #1 (Strong Buy) stock still has more room to run. The stock is currently trading at a forward P/E of 20.2x and has long-term earnings growth expectation of 12.5%.

Growth Drivers

Navigant recently acquired Ecofys, a premier global consultancy firm based in Europe, for an undisclosed sum. Headquartered in the Netherlands, Ecofys has evolved as a pioneer in sustainability consulting with over three decades of rich experience. Ecofys specializes in the fields of energy and sustainability and augments Navigant’s expertise in the areas of energy policy, climate strategies and policies, energy systems and markets, urban energy, and sustainability services. The acquisition will enable Navigant to better serve its clients and adapt to the ongoing energy and climate transition.

Navigant also continued with its steady performance in third-quarter 2016 with adjusted earnings of 37 cents per share, compared with 30 cents in the prior-year quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate by 8 cents.  

Total revenues for the quarter were $261.4 million compared with $230.1 million in the prior-year period. Revenues before reimbursements increased 13.1% year over year to approximately $237.1 million, beating the Zacks Consensus Estimate of $232 million. Revenues increased due to strong demand in Financial Services Advisory, Compliance Healthcare and Energy Segments.

NAVIGANT CONSLT Price and Consensus

 

NAVIGANT CONSLT Price and Consensus | NAVIGANT CONSLT Quote

In concurrence with the solid quarterly results, Navigant raised its 2016 outlook. The company expects revenues before reimbursements in the range of $920–$940 million, compared with the earlier expectation of $900–$940 million. Total revenues are expected to be in the range of $1.00–$1.02 billion (up from $960 million to $1.01 billion projected earlier). Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) is expected to be in the range of $137.5–$145.0 million (up from the earlier expectation of $132–$145 million), while adjusted earnings per share is expected to be in the range of $1.15–$1.25 (up from the prior expectation of $1.05–$1.15). The current Zacks Consensus Estimate for 2016 is pegged at $1.23, well within the guided range.

Management is taking further steps to restructure the business in order to better align the capacity with demand. Utilizing its strong cash flow generation capacity, the company continues to return significant capital to its shareholders and making investments in technology, new capabilities and client channels. At the same time, Navigant is focusing on corporate development efforts to build a very robust pipeline of investment opportunities which is in line with its growth strategy.

All these strategic steps might have boosted investor confidence, catapulting the shares to a new 52-week high.

Stocks to Consider

Some other favorably ranked stocks in the industry include Accenture plc (ACN - Free Report) , CRA International Inc. (CRAI - Free Report) and Exponent Inc. (EXPO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Accenture is currently trading at a forward P/E of 20.0x and has beaten estimates thrice in the trailing four quarters, the average positive earnings surprise being 3.2%.

Applied Industrial has a long-term earnings growth expectation of 8% and is currently trading at a forward P/E of 24.3x.

Exponent has a long-term earnings growth expectation of 12% and is currently trading at a forward P/E of 39.5x.

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