Intrinsic value of FTI Consulting, Inc. - FCN

Previous Close

$75.67

  Intrinsic Value

$194.65

stock screener

  Rating & Target

str. buy

+157%

Previous close

$75.67

 
Intrinsic value

$194.65

 
Up/down potential

+157%

 
Rating

str. buy

We calculate the intrinsic value of FCN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
Revenue, $m
  2,190
  2,359
  2,534
  2,716
  2,906
  3,102
  3,307
  3,520
  3,741
  3,972
  4,212
  4,462
  4,723
  4,995
  5,279
  5,576
  5,885
  6,209
  6,548
  6,902
  7,272
  7,659
  8,065
  8,490
  8,934
  9,400
  9,888
  10,400
  10,937
  11,499
Variable operating expenses, $m
  1,013
  1,082
  1,153
  1,228
  1,305
  1,385
  1,468
  1,555
  1,645
  1,739
  1,716
  1,818
  1,925
  2,035
  2,151
  2,272
  2,398
  2,530
  2,668
  2,812
  2,963
  3,121
  3,286
  3,459
  3,641
  3,830
  4,029
  4,238
  4,456
  4,686
Fixed operating expenses, $m
  893
  913
  933
  953
  974
  996
  1,018
  1,040
  1,063
  1,086
  1,110
  1,135
  1,160
  1,185
  1,211
  1,238
  1,265
  1,293
  1,322
  1,351
  1,380
  1,411
  1,442
  1,473
  1,506
  1,539
  1,573
  1,607
  1,643
  1,679
Total operating expenses, $m
  1,906
  1,995
  2,086
  2,181
  2,279
  2,381
  2,486
  2,595
  2,708
  2,825
  2,826
  2,953
  3,085
  3,220
  3,362
  3,510
  3,663
  3,823
  3,990
  4,163
  4,343
  4,532
  4,728
  4,932
  5,147
  5,369
  5,602
  5,845
  6,099
  6,365
Operating income, $m
  284
  364
  448
  535
  626
  722
  821
  925
  1,033
  1,146
  1,385
  1,509
  1,639
  1,774
  1,917
  2,066
  2,222
  2,386
  2,558
  2,739
  2,928
  3,128
  3,337
  3,557
  3,788
  4,031
  4,286
  4,555
  4,837
  5,134
EBITDA, $m
  429
  512
  597
  687
  780
  878
  979
  1,085
  1,196
  1,312
  1,433
  1,560
  1,692
  1,831
  1,977
  2,129
  2,289
  2,457
  2,633
  2,817
  3,011
  3,215
  3,429
  3,654
  3,890
  4,138
  4,399
  4,673
  4,962
  5,265
Interest expense (income), $m
  23
  22
  29
  36
  43
  50
  58
  67
  75
  84
  93
  103
  113
  123
  134
  145
  157
  170
  183
  196
  210
  225
  240
  256
  273
  291
  310
  329
  349
  371
  393
Earnings before tax, $m
  262
  336
  412
  492
  576
  663
  754
  849
  949
  1,053
  1,282
  1,396
  1,515
  1,640
  1,771
  1,908
  2,052
  2,203
  2,362
  2,529
  2,703
  2,887
  3,080
  3,283
  3,497
  3,721
  3,957
  4,205
  4,467
  4,741
Tax expense, $m
  71
  91
  111
  133
  156
  179
  204
  229
  256
  284
  346
  377
  409
  443
  478
  515
  554
  595
  638
  683
  730
  780
  832
  887
  944
  1,005
  1,068
  1,135
  1,206
  1,280
Net income, $m
  191
  245
  301
  359
  420
  484
  551
  620
  693
  769
  936
  1,019
  1,106
  1,197
  1,293
  1,393
  1,498
  1,608
  1,724
  1,846
  1,973
  2,108
  2,249
  2,397
  2,553
  2,716
  2,889
  3,070
  3,261
  3,461

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,571
  2,769
  2,974
  3,188
  3,410
  3,641
  3,881
  4,131
  4,391
  4,662
  4,943
  5,237
  5,543
  5,863
  6,196
  6,544
  6,908
  7,288
  7,685
  8,100
  8,535
  8,990
  9,466
  9,964
  10,486
  11,033
  11,606
  12,207
  12,836
  13,496
Adjusted assets (=assets-cash), $m
  2,571
  2,769
  2,974
  3,188
  3,410
  3,641
  3,881
  4,131
  4,391
  4,662
  4,943
  5,237
  5,543
  5,863
  6,196
  6,544
  6,908
  7,288
  7,685
  8,100
  8,535
  8,990
  9,466
  9,964
  10,486
  11,033
  11,606
  12,207
  12,836
  13,496
Revenue / Adjusted assets
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
  0.852
Average production assets, $m
  749
  807
  867
  929
  994
  1,061
  1,131
  1,204
  1,279
  1,358
  1,440
  1,526
  1,615
  1,708
  1,805
  1,907
  2,013
  2,124
  2,239
  2,360
  2,487
  2,619
  2,758
  2,903
  3,056
  3,215
  3,382
  3,557
  3,740
  3,933
Working capital, $m
  153
  165
  177
  190
  203
  217
  231
  246
  262
  278
  295
  312
  331
  350
  370
  390
  412
  435
  458
  483
  509
  536
  565
  594
  625
  658
  692
  728
  766
  805
Total debt, $m
  348
  434
  523
  616
  712
  812
  916
  1,024
  1,137
  1,254
  1,376
  1,503
  1,636
  1,774
  1,918
  2,069
  2,226
  2,391
  2,563
  2,743
  2,931
  3,128
  3,334
  3,550
  3,776
  4,013
  4,261
  4,521
  4,793
  5,079
Total liabilities, $m
  1,113
  1,199
  1,288
  1,380
  1,477
  1,577
  1,681
  1,789
  1,901
  2,018
  2,140
  2,268
  2,400
  2,539
  2,683
  2,834
  2,991
  3,156
  3,328
  3,507
  3,696
  3,893
  4,099
  4,315
  4,541
  4,777
  5,025
  5,286
  5,558
  5,844
Total equity, $m
  1,458
  1,570
  1,686
  1,808
  1,934
  2,065
  2,201
  2,342
  2,490
  2,643
  2,803
  2,969
  3,143
  3,324
  3,513
  3,711
  3,917
  4,132
  4,357
  4,593
  4,839
  5,097
  5,367
  5,650
  5,946
  6,256
  6,581
  6,921
  7,278
  7,652
Total liabilities and equity, $m
  2,571
  2,769
  2,974
  3,188
  3,411
  3,642
  3,882
  4,131
  4,391
  4,661
  4,943
  5,237
  5,543
  5,863
  6,196
  6,545
  6,908
  7,288
  7,685
  8,100
  8,535
  8,990
  9,466
  9,965
  10,487
  11,033
  11,606
  12,207
  12,836
  13,496
Debt-to-equity ratio
  0.240
  0.280
  0.310
  0.340
  0.370
  0.390
  0.420
  0.440
  0.460
  0.470
  0.490
  0.510
  0.520
  0.530
  0.550
  0.560
  0.570
  0.580
  0.590
  0.600
  0.610
  0.610
  0.620
  0.630
  0.640
  0.640
  0.650
  0.650
  0.660
  0.660
Adjusted equity ratio
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  191
  245
  301
  359
  420
  484
  551
  620
  693
  769
  936
  1,019
  1,106
  1,197
  1,293
  1,393
  1,498
  1,608
  1,724
  1,846
  1,973
  2,108
  2,249
  2,397
  2,553
  2,716
  2,889
  3,070
  3,261
  3,461
Depreciation, amort., depletion, $m
  146
  148
  150
  152
  154
  156
  158
  161
  163
  166
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  92
  97
  102
  107
  113
  119
  125
  131
Funds from operations, $m
  337
  393
  451
  511
  574
  640
  709
  781
  856
  935
  984
  1,070
  1,160
  1,254
  1,353
  1,457
  1,565
  1,679
  1,799
  1,924
  2,056
  2,195
  2,341
  2,494
  2,655
  2,824
  3,001
  3,189
  3,385
  3,592
Change in working capital, $m
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  38
  39
Cash from operations, $m
  326
  381
  438
  498
  561
  626
  695
  766
  841
  918
  967
  1,053
  1,142
  1,235
  1,333
  1,436
  1,544
  1,657
  1,775
  1,900
  2,030
  2,168
  2,312
  2,464
  2,623
  2,791
  2,967
  3,153
  3,348
  3,553
Maintenance CAPEX, $m
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -97
  -102
  -107
  -113
  -119
  -125
New CAPEX, $m
  -55
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -101
  -106
  -111
  -116
  -121
  -127
  -133
  -139
  -145
  -152
  -159
  -167
  -175
  -183
  -192
Cash from investing activities, $m
  -78
  -83
  -87
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -127
  -134
  -140
  -147
  -154
  -161
  -170
  -178
  -187
  -196
  -206
  -216
  -226
  -237
  -249
  -261
  -274
  -288
  -302
  -317
Free cash flow, $m
  247
  298
  351
  407
  465
  526
  589
  656
  725
  797
  840
  919
  1,002
  1,088
  1,179
  1,274
  1,374
  1,479
  1,589
  1,704
  1,825
  1,952
  2,086
  2,227
  2,374
  2,530
  2,693
  2,865
  3,046
  3,236
Issuance/(repayment) of debt, $m
  83
  86
  89
  93
  96
  100
  104
  108
  113
  117
  122
  127
  133
  138
  144
  151
  157
  165
  172
  180
  188
  197
  206
  216
  226
  237
  248
  260
  273
  286
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  83
  86
  89
  93
  96
  100
  104
  108
  113
  117
  122
  127
  133
  138
  144
  151
  157
  165
  172
  180
  188
  197
  206
  216
  226
  237
  248
  260
  273
  286
Total cash flow (excl. dividends), $m
  330
  384
  441
  500
  562
  626
  693
  764
  837
  914
  962
  1,046
  1,134
  1,227
  1,324
  1,425
  1,532
  1,643
  1,761
  1,884
  2,013
  2,149
  2,292
  2,443
  2,601
  2,767
  2,941
  3,125
  3,318
  3,522
Retained Cash Flow (-), $m
  -109
  -112
  -117
  -121
  -126
  -131
  -136
  -142
  -147
  -153
  -160
  -167
  -174
  -181
  -189
  -197
  -206
  -215
  -225
  -236
  -246
  -258
  -270
  -283
  -296
  -310
  -325
  -341
  -357
  -374
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  221
  272
  324
  379
  436
  495
  557
  622
  690
  761
  802
  880
  961
  1,046
  1,134
  1,228
  1,325
  1,428
  1,535
  1,648
  1,767
  1,892
  2,022
  2,160
  2,305
  2,457
  2,616
  2,785
  2,961
  3,147
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  212
  249
  282
  312
  338
  359
  376
  389
  396
  399
  381
  375
  365
  351
  333
  312
  288
  263
  236
  209
  183
  157
  133
  110
  90
  72
  56
  43
  32
  24
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

FTI Consulting, Inc. is a business advisory company. The Company operates through five segments: Corporate Finance & Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology and Strategic Communications. The Company provides advice and services, such as restructuring (including bankruptcy), capital formation and indebtedness, interim business management, performance improvements, forensic accounting and litigation matters, international arbitrations, mergers and acquisitions (M&A), antitrust and competition matters, securities litigation, electronic discovery (or e-discovery), management and retrieval of electronically stored information (ESI), reputation management and strategic communications. The Company collaborates with Chief Financial Officers (CFOs) and their finance and accounting organizations and uses engagement tools to provide transformation services, manage risk, deliver business intelligence capabilities, and prepare for and execute events.

FINANCIAL RATIOS  of  FTI Consulting, Inc. (FCN)

Valuation Ratios
P/E Ratio 37
Price to Sales 1.8
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 13.7
Price to Free Cash Flow 15.6
Growth Rates
Sales Growth Rate 1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -6.5%
Cap. Spend. - 3 Yr. Gr. Rate -7.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 30.3%
Total Debt to Equity 30.3%
Interest Coverage 7
Management Effectiveness
Return On Assets 4.6%
Ret/ On Assets - 3 Yr. Avg. 4.1%
Return On Total Capital 5.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 7.3%
Return On Equity - 3 Yr. Avg. 6.2%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 33.1%
Gross Margin - 3 Yr. Avg. 34%
EBITDA Margin 11%
EBITDA Margin - 3 Yr. Avg. 11.1%
Operating Margin 7.8%
Oper. Margin - 3 Yr. Avg. 8.1%
Pre-Tax Margin 7.1%
Pre-Tax Margin - 3 Yr. Avg. 6.2%
Net Profit Margin 4.8%
Net Profit Margin - 3 Yr. Avg. 3.9%
Effective Tax Rate 32.8%
Eff/ Tax Rate - 3 Yr. Avg. 37.2%
Payout Ratio 0%

FCN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FCN stock intrinsic value calculation we used $2028 million for the last fiscal year's total revenue generated by FTI Consulting, Inc.. The default revenue input number comes from 0001 income statement of FTI Consulting, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FCN stock valuation model: a) initial revenue growth rate of 8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for FCN is calculated based on our internal credit rating of FTI Consulting, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of FTI Consulting, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FCN stock the variable cost ratio is equal to 46.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $874 million in the base year in the intrinsic value calculation for FCN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 8.2% for FTI Consulting, Inc..

Corporate tax rate of 27% is the nominal tax rate for FTI Consulting, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FCN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FCN are equal to 34.2%.

Life of production assets of 32.9 years is the average useful life of capital assets used in FTI Consulting, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FCN is equal to 7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1348.825 million for FTI Consulting, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 37.892 million for FTI Consulting, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of FTI Consulting, Inc. at the current share price and the inputted number of shares is $2.9 billion.

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