We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should Investors Buy FCN as Growth Offsets Rising Margin Pressure?
Read MoreHide Full Article
Key Takeaways
FTI Consulting's Q2 revenues rose 5.3%, led by growth across Corporate Finance, Technology & other practices.
FCN's adjusted EBITDA fell 6.4% as higher direct costs and SG&A expenses outweighed revenue growth.
FCN trades at 14.6X forward consensus EPS, well below its five-year median of 21.8X.
FTI Consulting, Inc. (FCN - Free Report) is growing across several practices, but that momentum is not flowing cleanly to profitability. Second-quarter 2026 revenues rose 5.3% year over year while adjusted EBITDA declined 6.4%.
That split defines the investment case. A valuation below FCN's historical norm and a favorable earnings outlook offer support, but higher costs and uneven event-driven demand leave limited room for execution missteps.
FCN's Growth Base Is Broadening
Corporate Finance revenues increased 8.5% year over year in the second quarter, Technology advanced 18.4% and Forensic and Litigation Consulting rose 4.1%. Strategic Communications revenues also increased 5.4% excluding pass-through revenues.
The breadth matters because FCN is not relying on one practice for growth. Corporate Finance also grew 13.6% in the first half of 2026, while Technology advanced 11.4%, reinforcing the case for a diversified revenue base.
FTI Consulting's Margins Face a Cost Test
Adjusted EBITDA fell to $104.5 million in the second quarter from $111.6 million a year earlier. The adjusted EBITDA margin contracted to 10.5% from 11.8% as higher direct costs and selling, general and administrative expenses outweighed revenue growth.
Selling, general and administrative expenses increased to $230.7 million from $202.2 million, reflecting higher compensation, travel and entertainment and legal expenses. Management now expects 2026 expenses in this category to be roughly $70 million above 2025, versus its earlier expectation of a $60 million increase.
FCN's Valuation Looks Reasonable, Not Cheap
FCN trades at 14.6X forward 12-month consensus EPS estimate, in line with 14.6X for the Zacks sub-industry. The stock's five-year median is 21.8X, so the current valuation is well below its own historical norm.
Image Source: Zacks Investment Research
That discount offers some support, but the near-peer valuation leaves less protection if margins disappoint. Huron Consulting Group Inc. (HURN - Free Report) , another consulting peer, reported 15.7% second-quarter growth in revenues before reimbursable expenses and raised its 2026 guidance.
FTI Consulting's Event-Driven Demand Adds Risk
Management described the restructuring market as softer in the first half of 2026 and said global regulatory scrutiny felt less intense than before. Gaps between major cases in the U.K. and geopolitical disruption in the Middle East added further variability.
CRA International Inc. (CRAI - Free Report) , which operates as Charles River Associates, reported 12.8% fiscal second-quarter revenue growth and raised full-year revenue guidance. That peer strength provides another reference point for consulting demand while FCN continues to manage engagement timing and mix.
FCN's Earnings Outlook Still Has Upside
Management reaffirmed 2026 revenue guidance of $3.94-$4.10 billion. The Zacks Consensus Estimate for 2026 revenues is $3.98 billion, implying about 5% growth from 2025 despite the softer demand pockets and elevated expense base.
The consensus estimate calls for earnings of $9.25 per share in 2026 and $11.05 in 2027. That trajectory points to stronger earnings growth next year if utilization improves and cost pressure moderates.
FCN's Signals Favor Patience Over Chasing
The current setup favors patience. FCN has broad revenue growth and a valuation well below its historical median, but margin compression, higher selling, general and administrative expenses and event-driven demand make the near-term risk-reward less decisive.
FTI Consulting’s VGM Score of A and Value Score of A, along with a Growth Score of B and Momentum Score of B, indicate favorable underlying style characteristics even as the Zacks Rank remains #3.
View the Zacks #1 Rank List
Image: Bigstock
Should Investors Buy FCN as Growth Offsets Rising Margin Pressure?
Key Takeaways
FTI Consulting, Inc. (FCN - Free Report) is growing across several practices, but that momentum is not flowing cleanly to profitability. Second-quarter 2026 revenues rose 5.3% year over year while adjusted EBITDA declined 6.4%.
That split defines the investment case. A valuation below FCN's historical norm and a favorable earnings outlook offer support, but higher costs and uneven event-driven demand leave limited room for execution missteps.
FCN's Growth Base Is Broadening
Corporate Finance revenues increased 8.5% year over year in the second quarter, Technology advanced 18.4% and Forensic and Litigation Consulting rose 4.1%. Strategic Communications revenues also increased 5.4% excluding pass-through revenues.
The breadth matters because FCN is not relying on one practice for growth. Corporate Finance also grew 13.6% in the first half of 2026, while Technology advanced 11.4%, reinforcing the case for a diversified revenue base.
FTI Consulting's Margins Face a Cost Test
Adjusted EBITDA fell to $104.5 million in the second quarter from $111.6 million a year earlier. The adjusted EBITDA margin contracted to 10.5% from 11.8% as higher direct costs and selling, general and administrative expenses outweighed revenue growth.
Selling, general and administrative expenses increased to $230.7 million from $202.2 million, reflecting higher compensation, travel and entertainment and legal expenses. Management now expects 2026 expenses in this category to be roughly $70 million above 2025, versus its earlier expectation of a $60 million increase.
FCN's Valuation Looks Reasonable, Not Cheap
FCN trades at 14.6X forward 12-month consensus EPS estimate, in line with 14.6X for the Zacks sub-industry. The stock's five-year median is 21.8X, so the current valuation is well below its own historical norm.
Image Source: Zacks Investment Research
That discount offers some support, but the near-peer valuation leaves less protection if margins disappoint. Huron Consulting Group Inc. (HURN - Free Report) , another consulting peer, reported 15.7% second-quarter growth in revenues before reimbursable expenses and raised its 2026 guidance.
FTI Consulting's Event-Driven Demand Adds Risk
Management described the restructuring market as softer in the first half of 2026 and said global regulatory scrutiny felt less intense than before. Gaps between major cases in the U.K. and geopolitical disruption in the Middle East added further variability.
CRA International Inc. (CRAI - Free Report) , which operates as Charles River Associates, reported 12.8% fiscal second-quarter revenue growth and raised full-year revenue guidance. That peer strength provides another reference point for consulting demand while FCN continues to manage engagement timing and mix.
FCN's Earnings Outlook Still Has Upside
Management reaffirmed 2026 revenue guidance of $3.94-$4.10 billion. The Zacks Consensus Estimate for 2026 revenues is $3.98 billion, implying about 5% growth from 2025 despite the softer demand pockets and elevated expense base.
The consensus estimate calls for earnings of $9.25 per share in 2026 and $11.05 in 2027. That trajectory points to stronger earnings growth next year if utilization improves and cost pressure moderates.
FCN's Signals Favor Patience Over Chasing
The current setup favors patience. FCN has broad revenue growth and a valuation well below its historical median, but margin compression, higher selling, general and administrative expenses and event-driven demand make the near-term risk-reward less decisive.
The stock carries a Zacks Rank #3 (Hold), which supports a wait-and-see stance rather than an aggressive new position. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FTI Consulting’s VGM Score of A and Value Score of A, along with a Growth Score of B and Momentum Score of B, indicate favorable underlying style characteristics even as the Zacks Rank remains #3.