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Tickers in this Article: NCI, CRAI, FCN
We have reaffirmed our long-term Neutral recommendation on FTI Consulting Inc. (FCN). Our recommendation is based on the company's strong inorganic growth in the international market, solid potential in Economic Consulting, adoption of restructuring programs and enhancement of shareholders' value partially offset by the mixed third-quarter 2012 results, frail performances in Technology, Forensic and Litigation Consulting as well as the Strategic Communications segment, and margin pressure. Moreover, we believe that much of the weak points in the stock are already considered in the current valuation. FTI Consulting is well positioned to benefit from an increased regulatory scrutiny and a proliferation of corporate litigation, which would leave the public companies with little leeway to deal with complex issues.

Internationally, FTI Consulting's unique capabilities of bringing together damage assessment, accounting, economics, statistics, finance, industry and global footprint make it an excellent partner for clients dealing with international arbitration issues.

FTI Consulting's international expansion remains strong. Contributions from the acquisitions made over the past few months in Europe, Asia and Latin America also make the company valuable on that front.

FTI Consulting's international expansion remains strong.  One of its latest acquisitions is Australia-based KordaMentha (Qld) (KMQ). Given KMQ's dominant position in the Australian market, the company expects the acquisition to provide impetus to its corporate finance advisory restructuring segment as well as strengthen its presence in Australia.

The prospects for its Economic Consulting segment remain encouraging. The segment continues to post positive results for the fourth consecutive time and continues to attract clients by providing advices in multiple jurisdictions. Further, the company's balance sheet remains impressive with plenty of cash.

There is a bearish thesis as well. FTI Consulting's third-quarter 2012 adjusted earnings beat the Zacks Consensus Estimate by a penny, but fell shy of the year-ago level. Total revenue in the reported quarter slipped year over year and also lagged the Zacks Consensus Estimate.

Given the concerns over the current market environment, volatile financial markets and a lack of visibility regarding the impact of future tax and regulatory policies, clients' spending patterns remain cautious. Moreover, corporate in-house counsels are aggressively managing their legal spending, thus slowing down the volume of legal work, which is resulting in a decline in profit at FTI.

Performances of the Technology, Strategic Communications and Forensic Litigation Consulting segments remain sluggish. FTI Consulting is experiencing margin pressure as well. FTI Consulting which competes with the likes of CRA International Inc. (CRAI) and Navigant Consulting Inc. (NCI), currently carries a Zacks #3 Rank that translates into a short-term 'Hold' rating

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