FTI Consulting, Inc (FCN) recently announced that its board of directors has approved a two-year share repurchase program worth approximately $250 million.
The company seeks to execute the program in the open market or in negotiated transactions or through accelerated stock buyback agreements, depending on share price and other macro factors. The global business advisory firm can also terminate the program at any time, without prior notice.
The company remains focused on enhancing share holder value and approved a two-year stock buyback program of up to $500.0 million earlier in November 2009, by terminating the $50.0 million stock repurchase program approved in February 2009. In September 2011, the company successfully completed its $500 million stock repurchase program.
As of March 31, 2012, the company had shares outstanding of about 43 million. At the end of first quarter 2012, the company had cash and cash equivalents (excluding restricted cash) of $182.4 million and long-term debt, net of $643.3 million.
We appreciate FTI Consulting’s effort to bolster long-term shareholder value. We believe that the share repurchase authorization affirms the company’s positive outlook and shows the company’s confidence in its fundamentals.
Concurrently, buying back shares will help the company in reducing the share count, thereby increasing earnings per share and return on equity. As of June 11, 2012, the shares of the company traded at $29.74. The stock had historically traded between $29.26 and $45.00 in the last 12 months. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price.
FTI Consulting, which competes with the likes of CRA International Inc. (CRAI) and Navigant Consulting Inc. (NCI), currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating. We are also maintaining our long-term Underperform recommendation on the stock.
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