FTI Consulting Continues to Be Best of Breed

TI Consulting (FCN) has been range bound for half a year after digesting a huge move last August. While very pricey, the company continues to execute as proven by earnings; and raised guidance for 2008. I don't have a major stake in this name at this point, but investors appear to be happy, and took the stock up 6% in after hours. My other position in this sector, Huron Consulting (HURN) is clearly not best of breed... but I still retain a minor position there as well despite a horrid chart. FTI has more exposure to the area I want to focus on with these stocks, the 'restructing' (aka bankruptcy) business.

From Reuters:

• FTI Consulting Inc (FCN) reported a 77 percent increase in quarterly profit, which also beat market expectations, and forecast a strong 2008 as the business advisory firm continues to benefit from the turmoil in the credit market.
• The Baltimore-based company posted a fourth-quarter net income of $30.8 million, or 60 cents a share, compared with $17.4 million, or 42 cents a share, in the year-ago period.
• Revenue increased about 29 percent to $280.5 million.
• Analysts expected earnings of 58 cents a share, before special items, on revenue of $261.5 million, according to Reuters Estimates.
• FTI, which derives 83 percent of its business from the United States, saw revenue from its corporate finance/restructuring consulting segment grow 27 percent to $73.6 million in the fourth quarter.
• The company expects 2008 earnings of $2.40 to $2.50 a share on revenue of $1,275 million to $1,315 million. Analysts see 2008 earnings of $2.34 a share, before special items, on revenue of $1,153.1 million.

From the CEO:

• Mr. Dunn concluded, "On a final note, from a business driver perspective, the global credit crisis cannot be ignored. What began as a virus in the U.S. sub-prime mortgage sector has erupted into a financial and economic plague - destabilizing world-wide economies, roiling credit markets and whipsawing stock markets. This plague is attacking transparency, liquidity and, most importantly, confidence in the world's financial markets and the institutions and enterprises that rely on them. Transparency, liquidity and confidence - the very issues our skills are designed to enhance - are vital to enterprise value, which our mission statement calls out for us to protect. We are seeing broadly-based demand in every one of our segments from credit related engagements - and that demand appears to be accelerating."

I was hoping this "rising tide" would help lift even a laggard like Huron Consulting, but so far, not so good on that end. Huron is far cheaper on 2008 estimates (north of $3) but far less reliable, so they are getting their deserved lower multiple.

Disclosure: Long both names in fund; long neither in personal account