A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.
Here we discuss about Navigant Consulting, Inc. (NCI - Free Report) , a stock that has rallied 22.3% year to date, significantly outperforming the industry’s gain of 2.9%.
We believe the stock has the potential to exceed expectations moving ahead. The reasons behind our optimism include the company’s strong segmental growth as well as benefits from acquisitions and hiring. The long-term expected earnings per share growth rate for the company is 13.5%.
Let’s delve deep to unearth the reasons behind the company’s impressive price performance.
Consistent Segmental Growth
Navigant’s investments in acquisition and hiring strengthened its Healthcare and Energy segment over time. Meanwhile, the demand for data analytics in healthcare across all markets has been increasing, given the access to new data as a result of the Affordable Care Act and new technologies.
Also, acquisition of Cymetrix and RevenueMed has extended Navigant’s business process management service capabilities to hospitals and physician groups. These buyouts and related hiring complement the company’s traditional consulting services, besides providing it with more recurring revenue streams.
Furthermore, the company has broadened its service offerings and expanded operations in important markets and geographies. Navigant has also grown its benchmarking, data and research services to offer a broad range of market research capabilities. In 2016, it acquired Ecofys Investments B.V., which proved conducive to the company. This buyout is helping Navigant to enhance its capacities in energy policy, energy systems and markets, urban energy, climate strategies and sustainability services.
Navigant’s Disputes, Forensics and Legal Technology segment has strengthened over time backed by its continuous efforts to enhance services and expand global reach. Additionally, the Financial Services Advisory and Compliance segment has grown through senior hiring.
Consistent Investment in Technology
Navigant’s continuous investments in technology infrastructure and development programs should help in boosting its business organically. Technology investments are augmenting the company’s technology-based service offerings, thus enabling it to efficiently meet the changing demands of its clients.
Development programs are aimed toward improving sales effectiveness and collaboration across the organization. Navigant’s other focus areas include employee development, talent management and mentoring programs.
Consistent investments in technology, acquisitions and hiring are adding to Navigant’s ability to grow its business organically, thus making us confident about the stock’s performance.
Zacks Rank and Key Picks
Navigant has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader Business Services sector include Automatic Data Processing (ADP - Free Report) , Mastercard Inc. (MA - Free Report) andBroadridge Financial Solutions Inc. (BR - Free Report) . While Mastercard sports a Zacks Rank #1 (Strong Buy), Automatic Data Processing and Broadridge carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Automatic Data Processing, Mastercard and Broadridge have a long-term expected earnings per share growth rate of 11%, 19.03% and 10%, respectively.
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