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FTI Consulting Lays Off Employees to Cut Operating Costs

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FTI Consulting, Inc. (FCN - Free Report) announced that it laid off 4% of its workforce during second-quarter 2017. The company took this step to cut costs and improve its financial position.

Per the company, nearly 200 of its roughly 4,700 employees may have been terminated. The company expects that costs incurred from streamlining measures would sum up to around $18 million, the impact of which will be seen in the second-quarter results.

Per a market research conducted by Research and Markets, the global consulting services expenditure increased from $70 million in 2011 to $90 million 2015, at a CAGR of 5% and is likely to grow to $106 million in 2019 at a CAGR of 5.1%. While the U.S. accounted for $300 billion or 50% of the global market, Europe accounted for $245 billion or 40% of the global market and Asia for barely $65 billion or 10%. Such cost streamlining measures are likely to have a positive impact on the company’s top line, going forward.

Increased regulatory scrutiny and a proliferation of corporate litigation could strengthen demand for the company’s products. Additionally, structural change has become a necessity in the rapidly evolving global markets 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 and are likely to boost its revenues.

FTI Consulting has unique capabilities of bringing together damage assessment, accounting, economics, statistics, finance and industry under a single umbrella. This makes it an excellent partner for global clients dealing with international arbitration issues, thereby leading to continued revenue growth from the existing international operations. FTI Consulting’s international expansion remains strong and is likely to continue in the future as well.

However, FTI Consulting has underperformed the Zacks categorized  Consulting Services industry in the last one month with a loss of 4.5% compared with 0.5% decline for the latter. The changes in capital markets, legal or regulatory requirements and general economic factors could hamper demand for services, thereby affecting the company’s profitability.

FTI Consulting currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include NV5 Global, Inc. (NVEE - Free Report) , Exponent, Inc. (EXPO - Free Report) and Information Services Group, Inc. (III - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

NV5 Global has a long-term earnings growth expectation of 20%. It topped earnings estimates twice in the trailing four quarters with a positive surprise of 1.8%.

Exponent has a long-term earnings growth expectation of 12%. It topped estimates twice in the trailing four quarters with an average positive earnings surprise of 1.1%.

Information Services Group has a long-term earnings growth expectation of 13%.

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