FTI Consulting, Inc.’s FCN top line is driven by diversification and international operations. Rising regulatory scrutiny and corporate litigation boost demand for the company’s products and services. Meanwhile, rising expenses hurt profitability.

The Zacks Consensus Estimate for FCN’s 2024 earnings is pegged at $8.1 per share, indicating 5.1% growth from the year-ago reported level. For 2025, FTI Consulting’s bottom line is pegged at $8.6 per share, suggesting a 6.5% year-over-year increase.

Factors That Auger Well for FCN’s Success

Diversified offerings and international operations fuel FTI Consulting’s top-line growth prospects. International businesses generated nearly 37% of its revenues in 2023. The diverse array of practices and services, multiple revenue streams, industry expertise and global reach differentiate FCN from its competitors.

Demand for FTI Consulting’s products is anticipated to be driven by rising regulatory scrutiny and a proliferation of corporate litigation. The necessity for structural change in the dynamic global markets as management teams look to fend off rivals, protect IP rights and transform businesses via mergers and acquisitions, divestiture and other restructuring activities calls for FCN’s specialized skill sets to boost revenues.

It is impressive that FTI Consulting relies on share buybacks to reward shareholders. In 2021, 2022 and 2023, the company repurchased shares worth $46.1 million, $85.4 million and $21 million, respectively. These initiatives instill investor confidence and positively impact the bottom line.

FCN's balance sheet looks strong. It had $386 million in cash and cash equivalents as of Sept. 30, 2024, against no debt. The majority of the cash is available for investments in growth initiatives.

The company’s solid cash reserves contribute to its strong liquidity. At the end of the third quarter of 2024, FCN reported a current ratio of 2.09, above the industry's average of 1.25. A current ratio above 1 suggests efficient short-term debt coverage.

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Risks Faced by FTI Consulting

FCN’s operating expenses surged on the back of rising direct costs of revenues, and selling, general and administrative expenses rising significantly. Operating expenses increased 10.6% year over year in 2022 and 14.2% in 2023. Increments as such can deter investments, hurting profitability and weakening the company's appeal to investors seeking efficient cost management and robust returns.

FTI Consulting never declared dividends and does not intend to. Dividend-seeking investors should avoid buying the stock.

FCN’s Zacks Rank & Stocks to Consider

FTI Consulting has a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the broader Zacks Business Services sector are CRA International, Inc. CRAI and Cintas Corporation CTAS, each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CRA International has a long-term earnings growth expectation of 16.2%. CRAI delivered a trailing four-quarter earnings surprise of 31%, on average.

Cintas has a long-term earnings growth expectation of 12%. CTAS delivered a trailing four-quarter earnings surprise of 7.7%, on average.

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