NEW YORK ( TheStreet) -- FTI Consulting (NYSE: FCN) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and attractive valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 8.6%. Since the same quarter one year prior, revenues slightly increased by 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FTI CONSULTING INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FTI CONSULTING INC increased its bottom line by earning $2.40 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.40).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Professional Services industry and the overall market on the basis of return on equity, FTI CONSULTING INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Professional Services industry average, but is greater than that of the S&P 500. The net income increased by 350.4% when compared to the same quarter one year prior, rising from $8.86 million to $39.88 million.
- In its most recent trading session, FCN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
-- Written by a member of TheStreet Ratings Staff