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Navigant Rides on Segmental Growth, Technology Investments

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Shares of Navigant Consulting, Inc. (NCI - Free Report) have gained 29.7% in the past year, outperforming the 10.2% rise of the industry it belongs to.


Recently, the company released strong third-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate. Adjusted earnings per share (from continuing operations) of 15 cents beat the consensus mark by 4 cents and came inched up from the year-ago quarter’s figure by a penny.

Revenues before reimbursements (RBR) of $171.39 million beat the consensus estimate by 2.1 million and improved 4.2% year over year. Total revenues of $187.62 million inched up 1.1% from the prior-year quarter’s figure.

Navigant has an impressive earnings surprise history. The company’s earnings beat estimates in three of the trailing four quarters, delivering an average positive surprise of 15.5%. In the past 30 days, the Zacks Consensus Estimate for fourth-quarter earnings is unchanged at 13 cents.

What’s Driving Navigant?

Navigant has been witnessing strong segmental growth. The company’s healthcare segment is being driven by acquisitions and recruitment of senior hires. Acquisition of Cymetrix and RevenueMed has expanded Navigant’s business process management service capabilities to hospitals and physician groups. These acquisitions and related hiring complement the company’s traditional consulting services and provide it with more recurring revenue streams.

The Energy segment is benefiting from investments in hiring, solution development and acquisitions. Also, the company has broadened service offerings and expanded operations in important markets and geographies. It has expanded benchmarking, data and research services to offer a broad range of market research capabilities.

Further, the acquisition of Ecofys Investments B.V. in 2016 proved conducive. This buyout is enabled Navigant enhance capacities in energy policy, energy systems and markets, urban energy, climate strategies as well as sustainability services. Additionally, the Financial Services Advisory and Compliance segment generated growth through senior hiring.

Navigant is consistently investing in technology infrastructure to boost service offerings so that it can efficiently meet the changing demands of its clients. Further, the company has invested in development programs that are aimed toward improving sales effectiveness and collaboration across the organization. Its other focus areas include employee development, talent management and mentoring programs. We believe that these initiatives add to Navigant’s ability to grow business organically.

Zacks Rank & Stocks to Consider

Currently, Navigant is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks in the broader Zacks Business Services sector are Paychex, Inc. (PAYX - Free Report) , Genpact Ltd. (G - Free Report) and WEX Inc. (WEX - Free Report) , each carrying a Zacks Rank #2 (Buy). The long-term expected EPS (three to five years) growth rate for Paychex, Genpact and WEX is 8.5%, 10% and 15%, respectively.

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