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FTI Consulting (FCN) Raises Share Repurchase Tally by $100M


In a concerted effort to return cash to shareholders, FTI Consulting, Inc. FCN increased its existing share repurchase program to buy an additional $100 million worth of stocks over a period of time through the open market or through negotiated transactions. The share buyback program is an extension of the strategic objective of the company to reward its shareholders with risk-adjusted returns.

With the hike in its share repurchase tally, FTI Consulting can now purchase an aggregate of $300 million worth of stock. As of Nov 30, 2017, the company bought back approximately 5.1 million shares at an average price of $36.39 per share for $186.6 million. Consequently, it presently has about $113.3 million worth of shares available for repurchase.

The management service provider intends to repurchase its shares by utilizing its operating cash flow. FTI Consulting has a relatively healthy balance sheet position with adequate liquidity. Increased regulatory scrutiny and a proliferation of corporate litigation are likely to increase demand for the company’s products. Additionally, structural change has become a necessity in the rapidly evolving global markets as management teams look to fend off rivals, protect intellectual property rights and transform businesses via M&A, divestiture and other restructuring activities. These developments call for FTI Consulting’s specialized skill sets and are likely to boost its revenues.

However, FTI Consulting has underperformed the industry with a year-to-date loss of 2.2% as against a gain of 23.4% for the latter. Despite improving corporate earnings and a strong liquidity, clients’ spending patterns remained cautious, given concerns over the current market environment, volatile financial markets and a lack of visibility regarding the impact of future tax and regulatory policies.

FTI Consulting is also highly exposed to foreign exchange rate risk. The revamped market dynamics from the Brexit referendum are expected to affect its trade relationship with the U.K. The company is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company.

Nevertheless, we remain impressed with the inherent growth prospects of this Zacks Rank #1 (Strong Buy) stock. Other stocks in the industry worth considering include Accenture plc ACN and NV5 Global, Inc. NVEE, carrying a Zacks Rank #2 (Buy), and CRA International, Inc. CRAI sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Accenture has a long-term earnings growth expectation of 10.3%. It topped earnings estimates in each of the trailing four quarters with an average positive surprise of 2.6%.

NV5 Global has a long-term earnings growth expectation of 20%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 4.5%.

CRA International topped estimates twice in the trailing four quarters with an average positive earnings surprise of 0.5%.

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