FTI Consulting (FCN) Up 1.9% Since Earnings Report: Can It Continue?

About a month has gone by since the last earnings report for FTI Consulting, Inc. (NYSE:FCN) . Shares have added about 1.9% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

FTI Consulting Beats Q3 Earnings, Revenues In Line

FTI Consulting reported healthy third-quarter 2017 results with adjusted earnings of $31.4 million or 83 cents per share compared with $21.7 million or 52 cents per share in the year-earlier quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 61 cents.

Revenues for the quarter improved 2.5% year over year to $449 million and matched the Zacks Consensus Estimate. The increase in revenues was primarily driven by higher revenues in the Corporate Finance & Restructuring segment.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the quarter was $57.4 million, up from $47.2 million in the prior-year quarter, owing to higher margin revenues, improved utilization and lower selling, general and administrative expenses.

Segmental Details

Corporate Finance & Restructuring revenues were $128.1 million, up 15.8% year over year due to higher demand for restructuring services globally. Adjusted EBITDA for the segment was $26.7 million, up from $17.8 million in the year-ago quarter due to higher revenues and improved utilization.

Economic Consulting revenues decreased to $111.8 million from $122.5 million in the prior-year quarter, largely driven by lower demand for antitrust services in North America. Adjusted EBITDA came in at $12.1 million versus $18.4 million in the prior-year quarter, due to lower revenues.

Forensic and Litigation Consulting revenues increased to $118.6 million in the quarter from $115 million in the year-earlier quarter, driven by higher demand for forensic accounting and advisory services and construction solutions offerings, partially offset by lower success fees in health solutions. Adjusted EBITDA for the segment increased to $22.5 million from $16.6 million on higher revenues.

Technology revenues decreased to $42.3 million from $44.1 million in the prior-year quarter on lower demand for managed review and lower pricing for hosting services, partially offset by higher demand for consulting services. Adjusted EBITDA fell to $6 million from $7.4 million in the year-ago quarter due to a decline in higher margin hosting-related revenues.

Strategic Communications revenues increased to $48.2 million from $45.8 million in the prior-year quarter due to retainer-based revenues, partially offset by lower pass-through revenues. Adjusted EBITDA for the segment was $8.1 million compared with $7.5 million in the prior-year quarter, largely due to higher revenues.

Balance Sheet & Cash Flow

FTI Consulting had cash and cash equivalents of $158 million as of Sep 30, 2017. Total debt was $461.1 million at the end of the first nine months of 2017. Net cash from operating activities in the first nine months of the year was $24 million compared with $111.6 million generated in the year-ago period.

The company repurchased 1,599,400 shares during the quarter at an average price of $32.98 per share for $52.7 million. As of Sep 30, 2017, FTI Consulting had approximately $26.1 million worth of shares available under its $200 million share repurchase authorization.

Guidance Updated

FTI Consulting revised its guidance for 2017. The company currently expects revenues to be approximately $1,775–$1,800 million compared with earlier projections of $1,775–$1,875 million. It, however, affirmed GAAP earnings guidance at $1.37 to $1.67 per share. The company continues to expect adjusted earnings per share in the range of $1.90–$2.20.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

VGM Scores

At this time, the stock has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than momentum investors.

Outlook

The stock has a Zacks Rank #1 (Strong Buy). We are looking for an above average return from the stock in the next few months.