What happened
Shares of FTI Consulting, Inc. (FCN 1.50%) fell as much as 13% on Thursday after the risk consulting company reported first-quarter 2017 financial results. At 11:15 a.m. EDT, the stock was still down 11.3%.
So what
Quarterly revenue dipped 5.1% to $446.3 million and net income dropped 53.6% to $14.0 million, or $0.34 per share. Wall Street analysts expected revenue of $455.4 million and earnings of $0.60 per share, so results fell well short.
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Management said that weak demand for the company's restructuring services in North America led to the decline, although there were some positive trends for forensic and litigation consulting segments.
Now what
It looks like today we're just seeing a resetting of expectations by investors, who had gotten ahead of themselves with FTI Consulting. Now that revenue and earnings are contracting, the stock looks pretty expensive at 18 times trailing earnings. Unless the restructuring business picks up, which is unlikely in this economic environment, we could be in for a continued downturn in the company's stock. And for that reason, I wouldn't be a buyer on the sell-off today.
