Value Investors Should Take A Long Hard Look At FTI Consulting

| About: FTI Consulting, (FCN)
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FTI Consulting (NYSE:FCN) is a consulting company which offers financial and litigation help. Its share price is currently at $25.99 which gives the company a market value of $1.09 billion. Its closest competitors include CRA International (NASDAQ:CRAI) and Navigant Consulting (NYSE:NCI).

Why FCN is appealing,

  • The company has a Price/Earnings ratio of just 11.7 compared to an industry average of 36.1 and its Price/Sales, 0.7, is less than half that of the industry average of 1.5.
  • FCN has much less debt on its books than most companies in its industry with a Debt/Equity of 0.6 compared to the average of 3.1. CapEx also rose in 2011 by around 33% although free cash flow fell.
  • In the fiscal year 2011-12, its net income rose almost 50%, while its revenue increased by over 10%. It reduced its shares outstanding by around 9% and provided 50% more earning per share than in 2010-11.
  • Zacks estimates that in 2013 EPS will grow by 12.52% from 2.23 to 2.51. Therefore, growth investors and value investors will find this appealing. Also, a discounted cash flow analysis of the company shows a more 100% upside from the current share price (here).

Consequently, I believe FTI Consulting is well worth a look at for value investors as it is clearly undervalued at the current share price. There is huge upside potential and very little downside potential so I believe it is a fairly safe investment as well.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in FCN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.