We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
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.
FCN or HURN: Which Consulting Services Stock is a Better Buy?
Read MoreHide Full Article
The consulting services industry comprises companies that offer professional advice in management, IT, human resources, environmental regulations, logistics and marketing, real estate, serving multiple end markets.
The industry is a beneficiary of non-manufacturing activities that grew for the 115th consecutive month in August, with the ISM-measured Non-Manufacturing Index touching 56.4%. The industry looks well poised for growth as globalization, consolidation and digitization that have been the key catalysts over the past few years will continue in the foreseeable future.
However, high cost of domestic talent due to a competitive labor market coupled with difficulty in attaining foreign talent due to Trump’s stringent policies on immigration is a headwind for consulting firms.
The Zacks Consulting Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #75. This rank places it in the top 29% of more than 250 Zacks industries and indicates strong growth prospects in the near term.
Given this backdrop, let’s do a comparative analysis of two consulting services stocks, FTI Consulting, Inc. (FCN - Free Report) and Huron Consulting Group Inc. (HURN - Free Report) . FTI Consulting has a market capitalization of $4.1 billion and Huron’s market cap is $804.7 million.
As both the stocks carry a Zacks Rank #1 (Strong Buy), we are using certain other parameters to give investors a better insight.
Price Performance
FTI Consulting has performed impressively on the bourse year to date compared with Huron and the industry. While FTI Consulting’s shares have surged a massive 62.6%, Huron and the industry have rallied 20.9% and 35.6%, respectively, over the said time frame.
Earnings Guidance
Earnings growth along with stock price gains is often an indication of a company’s strong prospects.
FTI Consulting’s third-quarter 2019 earnings are projected to grow 3% year over year while that of Huron are expected to grow 3.1%. FTI Consulting’s 2019 earnings are projected to grow 35.5% compared with Huron’s expected growth rate of 20.2%.
Earnings Surprise History
Earnings surprise history gives investors an idea of a company’s performance in the previous quarters.
FTI Consulting and Huron have an impressive trailing four-quarter earnings surprise history. FTI Consulting delivered an average positive surprise of 70.8% compared with Huron’s 13.4%.
Net Margin
Net profit margin helps investors evaluate a company’s business model in terms of pricing policy, cost structure and operating efficiency, and shows how good it is at converting revenues into profits. Hence, a strong net profit margin is preferred by all classes of investors.
Even though readings for both the companies compare unfavorably with the industry’s figure of 10.7%, FTI Consulting has a lead with TTM net margin of 9.2%, compared with Huron’s 6%.
Valuation
Comparing the companies with each other and the industry on the basis of price-to-forward 12 months’ earnings, which is a commonly used multiple for the consulting industry, we see that Huron’s 23.72X is higher than FTI Consulting’s 19.67X and the industry’s 22.85X.
So, FTI Consulting looks cheaper compared with Huron.
Bottom Line
Our comparative analysis shows that FTI Consulting scores over Huron in terms of share price performance, current year expected earnings growth, surprise history and net margin. Despite a fast share price rally in the past year, FTI Consulting‘s valuation is cheap compared with Huron.
Long-term expected earnings (three to five years) growth rate for Charles River and Nielsen is 13% and 12%, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
FCN or HURN: Which Consulting Services Stock is a Better Buy?
The consulting services industry comprises companies that offer professional advice in management, IT, human resources, environmental regulations, logistics and marketing, real estate, serving multiple end markets.
The industry is a beneficiary of non-manufacturing activities that grew for the 115th consecutive month in August, with the ISM-measured Non-Manufacturing Index touching 56.4%. The industry looks well poised for growth as globalization, consolidation and digitization that have been the key catalysts over the past few years will continue in the foreseeable future.
However, high cost of domestic talent due to a competitive labor market coupled with difficulty in attaining foreign talent due to Trump’s stringent policies on immigration is a headwind for consulting firms.
The Zacks Consulting Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #75. This rank places it in the top 29% of more than 250 Zacks industries and indicates strong growth prospects in the near term.
Given this backdrop, let’s do a comparative analysis of two consulting services stocks, FTI Consulting, Inc. (FCN - Free Report) and Huron Consulting Group Inc. (HURN - Free Report) . FTI Consulting has a market capitalization of $4.1 billion and Huron’s market cap is $804.7 million.
As both the stocks carry a Zacks Rank #1 (Strong Buy), we are using certain other parameters to give investors a better insight.
Price Performance
FTI Consulting has performed impressively on the bourse year to date compared with Huron and the industry. While FTI Consulting’s shares have surged a massive 62.6%, Huron and the industry have rallied 20.9% and 35.6%, respectively, over the said time frame.
Earnings Guidance
Earnings growth along with stock price gains is often an indication of a company’s strong prospects.
FTI Consulting’s third-quarter 2019 earnings are projected to grow 3% year over year while that of Huron are expected to grow 3.1%. FTI Consulting’s 2019 earnings are projected to grow 35.5% compared with Huron’s expected growth rate of 20.2%.
Earnings Surprise History
Earnings surprise history gives investors an idea of a company’s performance in the previous quarters.
FTI Consulting and Huron have an impressive trailing four-quarter earnings surprise history. FTI Consulting delivered an average positive surprise of 70.8% compared with Huron’s 13.4%.
Net Margin
Net profit margin helps investors evaluate a company’s business model in terms of pricing policy, cost structure and operating efficiency, and shows how good it is at converting revenues into profits. Hence, a strong net profit margin is preferred by all classes of investors.
Even though readings for both the companies compare unfavorably with the industry’s figure of 10.7%, FTI Consulting has a lead with TTM net margin of 9.2%, compared with Huron’s 6%.
Valuation
Comparing the companies with each other and the industry on the basis of price-to-forward 12 months’ earnings, which is a commonly used multiple for the consulting industry, we see that Huron’s 23.72X is higher than FTI Consulting’s 19.67X and the industry’s 22.85X.
So, FTI Consulting looks cheaper compared with Huron.
Bottom Line
Our comparative analysis shows that FTI Consulting scores over Huron in terms of share price performance, current year expected earnings growth, surprise history and net margin. Despite a fast share price rally in the past year, FTI Consulting‘s valuation is cheap compared with Huron.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are Charles River Associates (CRAI - Free Report) and Nielsen , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term expected earnings (three to five years) growth rate for Charles River and Nielsen is 13% and 12%, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>