FTI Consulting, Inc.

FCN Details

FTI Consulting, Inc. (NYSE: FCN) is a global business advisory company helping organizations manage change, minimize risk, and resolve disputes. The Company operates through five segments: Corporate Finance & Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology and Strategic Communications.

Result Performance (Q2FY21 ended 30 June 2021)

• Revenues for the period stood at $711.49 million, increasing by 3.7% QoQ and 17.0% YoY, whereby, revenues from Corporate Finance & Restructuring declined by 6.1% YoY, while  revenues from Forensic and Litigation Consulting, Economic Consulting, Technology and Strategic Communications, was up by 41.7%, 21.0%, 67.0% and 19.2% YoY, respectively.
• Consolidated Net Income for the period stood at $62.78 million, as compared to $48.17 million in the previous corresponding period.
• Adjusted EBITDA for the period stood at $92.31 million, as compared to $75.80 million in the pcp.

Key Data (Source: Company Reports)

Outlook:

The company has offices in 86 cities and 29 countries thus, has a presence across the globe that provides opportunities as well as challenges. The management believes that there would be increased growth momentum across segments in upcoming years, thereby, helping the company to generate value for its shareholders.

FY21 Guidance: Revenue for FY21 has been anticipated between $2,700-$2,800 million. Earnings Per Diluted Share for FY21 has been anticipated between $5.89-$6.39. Adjusted Earnings Per Diluted Share for FY21 has been anticipated between $6.00-$6.50.

Key Risks:

Increasing competition and risks relating to cybersecurity may put revenues and margins under pressure. Further, changes in capital markets, legal requirements, monetary or geopolitical disruptions, might reduce demand for FCN’s offerings.

Valuation Methodology: EV/EBITDA Based Relative Valuation (Illustrative)

Stock Recommendation:

The company’s EBITDA margin and net margin for Q2FY21 stood at 13.4% and 8.8%, better than the industry median of 12.7% and 6.1%, respectively, implying an improvement in margins  for the company. The stock rose by ~21.99% in 9 months. The stock has been valued using an EV/EBITDA multiple- based illustrative relative valuation method and  a target price which reflects a fall of high single-digit (in % terms) has been arrived. The company might trade at a slight discount to EV/EBITDA Multiple (NTM)  (Peer Average) considering fall in the cash and cash equivalents in Q2 FY 2021 on the YoY basis as well as risks associated.

The stock is trading towards the 52-week higher levels and, therefore, we advise the investors to liquidate the stock.

Thus, we give a “Sell” rating on the stock at the current market price of $138.01 per share (Time: 12:36 PM, NY, US) on 17^th September 2021.  

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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