FTI Consulting (FCN): High-powered help for corporations in trouble

It's a complex business environment and managers can sometimes use outside help with important investigations, high-stakes litigation, and overall corporate performance issues. There is an outfit in Baltimore known for its expertise along those lines.

FTI Consulting (NYSE: FCN) provides forensic/litigation services to major corporations, financial institutions and law firms. Company experts offer investigative services to firms facing fraud, disclosure, and malpractice issues, to assist them in their legal defense or pursuit of recoveries. FTI also serves its clients with expert testimony and corporate restructuring services. In addition, FTI offers economic consulting and advises clients on merger & acquisition deals and regulatory matters. The firm serves more that 1,000 clients through about 30 offices in the US, the UK and the Asia/Pacific region.

The company pleased investors earlier in the month, when it reported Q2 EPS of 53 cents and revenues of $239.7 million. Analysts had been expecting 44 cents and $222.86 million. Management also guided FY07 EPS to $1.92-2.00 ($1.81 consensus) and FY07 revenues to $944-962 million ($922.41M consensus).

The news popped the shares out of a late July/early August "cup" into the mid-August "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle".

Brokers recommend the issue with four "strong buys" and six "buys". Analysts expect a 24% growth rate, through the next year. The FCN Price to Sales ratio (2.47), Price to Book ratio (3.32), Sales Growth rate (50.09%) and EPS Growth rate (65.63%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 95% of the outstanding shares. Over the past 52 weeks, FCN has traded between $21.02 and $53.67. A stop-loss of $44.00 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.