Why FTI Consulting (FCN) Stock Is Up Today

NEW YORK (TheStreet) -- FTI Consulting (FCN) stock moved higher on Monday after upwardly-revising its second-quarter and full-year guidance. By market close, shares had spiked 9% to $36.14.

Over its second quarter ending June, the company anticipates revenue between $445 million and $450 million on earnings of 49 cents to 55 cents a share. Analysts surveyed by Thomson Reuters forecast earnings of 41 cents a share and revenue of $436.8 million. 

For its full year, management guides for earnings of $1.55 to $1.70 a share and revenue of $1.73 billion to $1.77 billion. Analysts had forecast earnings of $1.54 a share and revenue of $1.72 billion. 

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TheStreet Ratings team rates FTI CONSULTING INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate FTI CONSULTING INC (FCN) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, FCN has a quick ratio of 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
  • FTI CONSULTING INC's earnings per share declined by 22.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FTI CONSULTING INC continued to lose money by earning -$0.31 versus -$0.99 in the prior year. This year, the market expects an improvement in earnings ($1.57 versus -$0.31).
  • Net operating cash flow has significantly decreased to -$110.80 million or 4708.81% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Professional Services industry. The net income has decreased by 23.5% when compared to the same quarter one year ago, dropping from $23.68 million to $18.12 million.
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