FTI Consulting, Inc. (NYSE:FCN) shareholders are probably feeling a little disappointed, since its shares fell 7.2% to US$125 in the week after its latest first-quarter results. It looks like the results were a bit of a negative overall. While revenues of US$605m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.5% to hit US$1.49 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on FTI Consulting after the latest results.
Taking into account the latest results, FTI Consulting's three analysts currently expect revenues in 2020 to be US$2.43b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 3.7% to US$5.55 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.46b and earnings per share (EPS) of US$5.48 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$158, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on FTI Consulting, with the most bullish analyst valuing it at US$171 and the most bearish at US$147 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that FTI Consulting's revenue growth will slow down substantially, with revenues next year expected to grow 0.9%, compared to a historical growth rate of 6.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.7% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than FTI Consulting.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$158, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for FTI Consulting going out to 2021, and you can see them free on our platform here.
You can also view our analysis of FTI Consulting's balance sheet, and whether we think FTI Consulting is carrying too much debt, for free on our platform here.
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