For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on FTI Consulting, Inc. (NYSE:FCN) useful as an attempt to give more color around how FTI Consulting is currently performing.
How Well Did FCN Perform?
FCN's trailing twelve-month earnings (from 30 June 2019) of US$195m has increased by 7.5% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 33%, indicating the rate at which FCN is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, FTI Consulting has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 8.3% exceeds the US Professional Services industry of 7.5%, indicating FTI Consulting has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for FTI Consulting’s debt level, has increased over the past 3 years from 8.9% to 13%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 61% to 20% over the past 5 years.
What does this mean?
Though FTI Consulting's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as FTI Consulting gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research FTI Consulting to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FCN’s future growth? Take a look at our free research report of analyst consensus for FCN’s outlook.
- Financial Health: Are FCN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.