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Does FTI Consulting, Inc.'s (NYSE:FCN) Past Performance Indicate A Stronger Future?

Simply Wall St
·3 min read

When FTI Consulting, Inc. (NYSE:FCN) released its most recent earnings update (31 March 2020), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how FTI Consulting performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see FCN has performed.

View our latest analysis for FTI Consulting

How Did FCN's Recent Performance Stack Up Against Its Past?

FCN's trailing twelve-month earnings (from 31 March 2020) of US$211m has jumped 21% 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 30%, indicating the rate at which FCN is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and whether the entire industry is feeling the heat.

NYSE:FCN Income Statement May 26th 2020
NYSE:FCN Income Statement May 26th 2020

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 8.6% exceeds the US Professional Services industry of 6.1%, 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 6.8% to 13%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 64% to 22% 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. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research FTI Consulting to get a better picture of the stock by looking at:

  1. 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.

  2. 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.

  3. 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 31 March 2020. This may not be consistent with full year annual report figures.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.