FTI CONSULTING, INC (FCN): what the price assumes

boothcheck covers FTI CONSULTING, INC (FCN) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-26.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/FCN

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.1% sits below it).

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.3%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• One of the five practices is doing the damage: Economic Consulting saw gross profit fall 39.5% to $142.4 million in 2025 while its billable headcount dropped 8.6% to 1,014 and utilisation slid to 59% from 66%, all with an average billable rate that barely moved.
• The rest of the firm went the other way: Forensic and Litigation Consulting lifted gross profit 21.7% to $274.1 million on an average billable rate of $442 an hour against $390, with headcount flat at 1,541.
• Second-quarter results are due July 30, 2026, and in June the board added 370 million dollars of repurchase capacity to a programme that has already retired roughly 19.1 million shares since 2016.

Bull Case

Begin with the balance sheet, because it explains what management believes. FTI carries roughly 754 million dollars of borrowings on a funded-debt basis, or about 1.0 billion dollars once operating leases are counted, against liquid assets near 198 million dollars. Interest expense in 2025 came to about 21.4 million dollars, which sits close to nineteen times covered by trailing operating profit. That is a services firm with a mortgage rather than a leveraged one, and it leaves management with genuine choices about where the cash goes.

What they chose was their own shares. The share count has fallen about 4% a year over the past four years, the repurchase programme first authorised in 2016 has retired roughly 19.1 million shares, and in June 2026 the board added another 370 million dollars of capacity to it. A consulting firm buying back stock at scale is making a specific claim: that its own equity is cheaper than the next hire, the next tuck-in acquisition or the next office. Given a multiple of about 14 times operating profit and a position in the lower half of the peer multiple range, that claim is at least internally consistent.

The operating case is that four practices out of five are working and one is not. Forensic and Litigation Consulting produced gross profit of $274.1 million in 2025 against $225.2 million, a 21.7% increase, at a gross profit margin of 35.8% against 32.6%. It did that with a headcount of 1,541 against 1,542, which means the entire gain came from pricing and mix: the average billable rate rose to $442 an hour from $390. Corporate Finance, the largest practice, moved the same way with utilisation of 60% against 58% and an average rate of $529 an hour against $510. Getting paid more per hour by the same people is the highest-quality revenue growth a professional services firm can produce.

Strategic Communications added the second-best year in the group. Revenue rose 11.1% excluding currency effects, driven by demand for corporate reputation work and an $18.2 million increase in pass-through revenues, and gross profit rose 14.1% to $140.0 million at a 37.0% margin. That happened with 907 billable professionals against 981, so the practice grew while carrying fewer people. Across the firm, the pattern in 2025 was fewer heads earning more per head, which is the opposite of the way consulting businesses usually chase growth.

There is also a structural hedge inside the portfolio that most service companies lack. The 10-K notes that certain practices, particularly our restructuring practice, tend to experience their highest demand during periods of economic distress, while the litigation, investigations and reputation practices run on regulatory and legal activity that does not track the business cycle either. Against peers, HURN reported a 10.4% operating margin on $1.75 billion of revenue growing 11.8%, and BAH a 9.2% margin on $11.2 billion with revenue down 6.4%; FTI's roughly 10% trailing operating margin sits in that same band while its multiple sits below the group. The bull case does not need a recovery story. It needs one practice to stop shrinking.

Bear Case

The entire investment case rests on an assumption that is neither stated nor obviously true: that Economic Consulting stabilises. That practice, which houses Compass Lexecon, produced gross profit of $142.4 million in 2025 against $235.1 million, a fall of 39.5%, at a gross profit margin of 19.7% against 27.2%. Look at what did and did not move underneath that. The average billable rate was $583 an hour against $584, so pricing held. Billable headcount fell 8.6% to 1,014 and utilisation fell to 59% from 66%. This is not a demand problem or a pricing problem. It is fewer people, working less of the time, and the people in question are exactly the ones clients hire by name.

The 10-K describes the mechanism without flinching. Client relationships in this business rest on expertise and bonds of personal trust and confidence, and as a result the barriers to our professionals pursuing independent business opportunities or joining our competitors or clients are low. It adds that although clients contract with the company rather than the individual, if a professional leaves, those clients may follow. A firm whose assets go home every evening has no mechanism to stop this other than paying more, and the cash flow statement shows exactly that happening.

Which is the second problem. Free Cash Flow was an inflow of $93.6 million in 2025 against $360.2 million in 2024, and the 10-K attributes the decline primarily to higher forgivable loan issuances, compensation payments and income tax payments. Forgivable loans are retention money advanced to senior professionals and written off over time if they stay. So the firm is converting cash into contractual stickiness, which is a reasonable response and also an admission of where the risk sits. That cost recurs, it scales with the threat, and it does not appear as an expense in the year it is paid.

Nor is the headcount contraction confined to one practice. Technology ended 2025 with 662 billable professionals against 714, and Strategic Communications with 907 against 981. Consolidated across the firm, growth in 2025 came from realised rates rather than capacity, and rate increases have a ceiling that client legal budgets set. A business that grows by charging more per hour while employing fewer hours has a finite runway on that strategy.

The valuation offers less protection than the headline multiple suggests. The methods that reach today's price are the ones that project growth forward. The methods that assume none do not: the price sits roughly 76% above where the earnings-power approaches land, and those approaches simply capitalise today's profit at a required return with no growth credited. For a firm where one practice is shrinking and three others are cutting heads, zero growth is not a hypothetical scenario, it is a plausible one, and on that assumption the current price is not cheap at all. Peer multiples land essentially on top of today's price rather than above it, which means the comparison group offers no cushion either.

Finally, the debt is real even if it is modest. Borrowings run about 754 million dollars on the funded-debt build, and roughly 1.0 billion dollars once leases are included, against liquid assets near 198 million dollars. The credit agreement contains covenants that may limit the ability to incur additional indebtedness. None of that threatens the firm today. It does mean the buyback capacity announced in June competes with the retention spending that is currently consuming the free cash flow, and one of those two commitments will give first.

Valuation

The market is paying about 14 times company-wide operating profit for FTI, and it is worth pausing on how unusual a starting point that is. Trailing operating profit runs close to 394 million dollars on revenue of roughly 3.87 billion dollars, which is an operating margin near 10%. The multiple sits in the lower half of the range applied to the peer group, and the arithmetic runs backwards from where it usually does: rather than requiring growth to justify the price, the price sits below what even a sustained decline in operating profit would warrant. That is a bound rather than a solved figure, and it is the most informative single statement available about this stock.

How the methods split tells the rest. The approaches that credit forward growth land above today's price, including a discounted cash-flow model that holds today's enterprise-value-to-EBITDA multiple of 13.9 times flat as its base case, compressing to 11.9 times in the bear scenario and expanding to 15.9 times in the bull. Peer multiples land essentially on top of the price: the comparison uses a static sector reference of eighteen times earnings held flat, with compression and expansion around it. The earnings-power approaches, which capitalise today's profit at a required return and credit no growth whatever, sit well under the price, which is about 76% above where they land. That spread is the actual question. It asks whether this is a business that grows at all from here.

The filing-sourced inputs make the question concrete rather than abstract, because the answer differs by practice. In 2025 Forensic and Litigation Consulting lifted gross profit 21.7% to $274.1 million with headcount flat and an average billable rate of $442 an hour against $390. Strategic Communications lifted gross profit 14.1% to $140.0 million. Economic Consulting went the other way, gross profit down 39.5% to $142.4 million with billable headcount at 1,014 against 1,110. Corporate Finance, the largest practice, ran utilisation of 60% against 58% at an average rate of $529 an hour. Four of five moving forward and one moving sharply back is what a 14 times multiple on a whole company looks like from the inside.

Set against the cohort, the position is unremarkable rather than distressed. HURN carries a 10.4% operating margin on $1.75 billion of revenue growing 11.8%, EXPO a 19.4% margin on $602.8 million growing 7.8%, and BAH a 9.2% margin on $11.2 billion with revenue down 6.4%. FTI's roughly 10% trailing operating margin belongs in that group without apology, and EXPO's premium margin comes from a far smaller and more specialised book. What separates FTI from these names is not profitability. It is that one of its five practices had a bad year visible enough to reset the multiple.

The balance sheet bounds the downside without doing much else. Interest expense of about 21.4 million dollars in 2025 is covered close to nineteen times by trailing operating profit, and borrowings run near 754 million dollars on the funded-debt build, or about 1.0 billion dollars once leases are counted, against liquid assets around 198 million dollars. The share count has fallen roughly 4% a year over four years. The decisive variable is not solvency and not the multiple. It is the billable headcount line in the Economic Consulting practice, which is disclosed every quarter and which will settle this argument before any valuation method does.

Catalysts

Second-quarter results arrive July 30, 2026, before the market opens, and the company confirmed the date on July 9, 2026. The line that matters is the one the market has stopped trusting: billable headcount and utilisation in Economic Consulting, which ended 2025 at 1,014 professionals and 59% utilisation. A stabilisation there changes the argument about this business more than any margin figure in the release will.

Capital allocation moved twice in the past two months. On June 5, 2026 the board authorised an additional 370 million dollars for the repurchase programme, which has retired roughly 19.1 million shares since it was first approved in 2016. Then on July 1, 2026 the company announced an increase and extension of its senior unsecured revolving credit facility, its third amendment to that agreement. Taken together, those are the actions of a management team arranging capacity to keep buying stock rather than preparing to defend a balance sheet.

The hiring side is worth watching for the same reason the departures were. On July 15, 2026 the firm announced the appointment of a senior managing director to expand its financial crime risk management practice in Australia. Individually that is a minor item. In a business where revenue arrives attached to named individuals and the bear case is built on those individuals leaving, the direction of senior hiring announcements is a genuine leading indicator, and it currently points the other way from 2025.

Peer Cohorts (Per Segment, With Filing Citations)

Corporate Finance (reported)

• HURN (HURON CONSULTING GROUP INC.)
• FY2025 10-K: …Future Financing Needs Our primary financing need is to fund our long-term growth. Our growth strategy is to expand our service offerings, which may require investments in new hires, acquisitions of complementary businesses, possible expansion into other geographic areas, and related capital expenditures. We believe…
• FY2025 10-K: …reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 available through our website, free of charge, as soon as reasonably practicable after we electronically file such material with, or…
• CBZ (CBIZ, Inc.)
• FY2025 10-K: …balance outstanding under the 2024 Credit Facilities at December 31, 2025 was $1,472.4 million, of which $972.4 million is subject to rate risk. If market rates were to increase or decrease 100 basis points from the levels at December 31, 2025, interest expense would increase or decrease approximately $9.7 million…
• FY2025 10-K: …of KPMG LLP 24* Powers of attorney (included on the signature page hereto). 31.1* Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certification of Chief…
• BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
• FY2025 10-K: …by the federal tax authorities. The Company is currently under federal audit by the Internal Revenue Service ("IRS") for fiscal years 2016, 2017 and 2019-2021. The other jurisdictions currently open or under examination are not considered to be material. It is difficult to predict the ultimate outcome or the timing…
• FY2025 10-K: …as well as for commercial customers, both domestically and in select international locations. The Company is headquartered in McLean, Virginia, with approximately 35,800 employees as of March 31, 2025, and reports operating results and financial data in one reportable segment. 2. Summary of Significant Accounting…

Forensic and Litigation Consulting (reported)

• HURN (HURON CONSULTING GROUP INC.)
• FY2025 10-K: …certain insurance coverages for cybersecurity incidents through our professional liability insurance policy, in amounts we believe to be reasonable and at a cost that is included in our general insurance premiums, but the policy limits and the breadth of coverage may be inadequate to cover any particular claim or all…
• FY2025 10-K: …Financial Instruments" for additional information on our contingent consideration liabilities. To the extent permitted by law, our bylaws and articles of incorporation require that we indemnify our officers and directors against judgments, fines and amounts paid in settlement, including attorneys' fees, incurred in…
• CBZ (CBIZ, Inc.)
• FY2025 10-K: …out-of-pocket expenses. The cumulative impact on any subsequent revision in the estimated realizable value of unbilled fees for a particular client project is reflected in the period in which the change becomes known. Prior to recognizing revenue for outcome-based arrangement, we estimate the transaction price,…
• FY2025 10-K: …insured directly and forwards the commission to us) are both recognized on the effective date of the policy. Commission revenue is reported net of reserves for estimated policy cancellations and terminations. The cancellation and termination reserve is based upon estimates and assumptions using historical…
• EXPO (EXPONENT, INC.)
• FY2025 10-K: …policies, see Note 1 of our Notes to Consolidated Financial Statements. Revenue recognition. We derive our revenues primarily from professional fees earned on consulting engagements, fees earned for the use of our equipment and facilities, as well as reimbursements for outside direct expenses associated with the…
• FY2025 10-K: …our operations. Given the highly specialized nature of our services and the scale of our operations, our executive officers, group vice presidents and practice/office directors must have a thorough understanding of our services and operations, as well as the skills and experience necessary to manage a large…

Economic Consulting (reported)

• HURN (HURON CONSULTING GROUP INC.)
• FY2025 10-K: ), enterprise resource planning ("ERP"), enterprise performance management ("EPM"), and customer relationship management ("CRM") systems; data management, AI and automation; technology managed services; and payor core F-39 Table of Contents HURON CONSULTING GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS…
• FY2025 10-K: …and specialty consulting firms; consulting divisions of our technology partners; and the internal professional resources of organizations. We compete with a large number of service and technology providers in all of our segments. Our competitors vary, depending on the particular industry and expertise area, and we…
• EXPO (EXPONENT, INC.)
• FY2025 10-K: …by those clients. Clients that have the capability to perform such services themselves will retain Exponent or other independent consultants because of independence concerns. In each of our practices, we believe that the principal competitive factors are: technical capability and breadth of services, ability to…
• FY2025 10-K: …clients design safer, more reliable, and higher‑performing products. As advanced materials and electrochemical technologies have become increasingly central to modern devices, understanding how they function - and fail - is essential to ensuring product safety, durability, and competitive performance. 7 We apply…
• BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
• FY2025 10-K: …by the federal tax authorities. The Company is currently under federal audit by the Internal Revenue Service ("IRS") for fiscal years 2016, 2017 and 2019-2021. The other jurisdictions currently open or under examination are not considered to be material. It is difficult to predict the ultimate outcome or the timing…
• FY2025 10-K: …new relationships, customers, capabilities, and service offerings in our U.S. and international businesses; • risks related to changes to our operating structure, capabilities, or strategy intended to address customer needs, grow our business, or respond to market developments; • the adoption by the U.S. government…
• IT (Gartner, Inc.)
• FY2025 10-K: …December 31, 2025 was primarily due to an increase of 15% in exhibitor revenue compared to the same period in 2024. The segment gross contribution margin was 50% and 48% in 2025 and 2024, respectively. The higher gross contribution margin during 2025 was primarily the result of the increase in revenue, partially…
• FY2025 10-K: …in-person conferences. Single day, local meetings are excluded. Consulting Consulting backlog represents future revenue to be derived from in-process consulting and benchmark analytics engagements. Utilization rate represents a measure of productivity of our consultants. Utilization rates are calculated for billable…
• G (GENPACT LIMITED)
• FY2025 10-K: …a disproportionate impact on our results of operations in the relevant geographic market, service or industry vertical. In addition, any deterioration in economic activity in North America or Europe, or in industries in which our clients operate, could adversely affect demand for our services, thus reducing our…
• FY2025 10-K: …solutions depends on our ability to attract existing or new clients to new service offerings, and the market for our solutions is highly competitive. We cannot be certain that our new services or solutions will effectively meet client needs or that we will be able to attract clients to these offerings. The complexity…

Technology (reported)

• EXLS (EXLSERVICE HOLDINGS, INC.)
• FY2025 10-K: …at sufficient speed and scale and successfully drive innovation, our ability to develop and maintain a competitive advantage, our growth strategy and our results of operations could be adversely affected. Technological developments may materially affect the cost and use of technology by our clients and, in the case…
• FY2025 10-K: …Our growth strategy focuses on responding to these types of developments by driving innovation that will enable us to expand our business into new growth areas. The use of AI technology presents competitive, reputational and legal risks, and our use of AI technology may not be successful. AI technologies, including…
• G (GENPACT LIMITED)
• FY2025 10-K: …technology ("IT") support services for legacy applications, including end-user computing support and infrastructure production support. We introduced the Advanced Technology Solutions and Core Business Services revenue disaggregation in the quarter that began on April 1, 2025. Prior to that, we disaggregated our…
• FY2025 10-K: 1A. Risk Factors Risks Related to our Business and Operations AI and other advanced technologies are having, and are expected to continue to have, a significant impact on our industry and the markets in which we compete. The development and use of AI and other advanced technologies present competitive, reputational…
• DFIN (Donnelley Financial Solutions, Inc.)
• FY2025 10-K: …communications, as well as iXBRL-formatted filings pursuant to the Investment Company Act, through the SEC's EDGAR system. The IC-CCM segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review…
• FY2025 10-K: …alternative providers. The Company expects competition to increase from existing competitors as well as new and emerging market entrants. In addition, as the Company expands its services and product offerings, it may face competition from new and existing competitors, including those offering AI-enabled or…
• CTSH (COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION)
• FY2025 10-K: …and insurance companies. Demand in this segment is driven by our clients' need to modernize legacy technology environments, strengthen operational resilience and adopt cloud, data and AI capabilities to meet evolving customer expectations and regulatory requirements. Our clients are expanding enterprise AI adoption…
• FY2025 10-K: …on our industry, and we believe our ability to compete in this space will be critical to our financial performance. We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. We have incurred and plan to continue to incur significant development and Cognizant…

Strategic Communications (reported)

• OMC (OMNICOM GROUP INC.)
• FY2025 10-K: …crisis communications multi-cultural marketing customer data analytics and data-driven decision making organizational communications customer relationship management package design decision sciences performance marketing digital experience design product placement digital transformation promotional marketing…
• FY2025 10-K: …for our services. Revenue is typically lower in the first and third quarters and higher in the second and fourth quarters, reflecting client spending patterns during the year, as well as additional project work that usually occurs in the fourth quarter. Certain global events targeted by major marketers for…
• WPP (WPP plc)
• FY2025 20-F: …in the period in which they are incurred. REVENUE RECOGNITION The Group offers national and multinational clients a comprehensive range of communications, experience, commerce and technology services. Certain contracts involve multiple agencies offering different services in different countries. As such, the terms of…
• FY2025 20-F: …and accuracy of underlying data used in the discounted cash flow models; (iv) evaluating the reasonableness of the significant assumptions used by management related to forecast revenue less pass-through costs growth rates and operating margins, long-term growth rates and post-tax discount rates; (v) comparing the…
• STGW (Stagwell Inc)
• FY2025 10-K: …segment delivers integrated AI-based data solutions that drive audience engagement and business growth through media buying, owned media platforms, commerce enablement, and Customer Relationship Management ("CRM") strategies. Its capabilities include planning and executing media campaigns across global platforms,…
• FY2025 10-K: …Assembly Global, commerce and CRM agency Gale. • The Communications segment provides a leading edge set of solutions designed to help organizations build, protect, and enhance their reputation across diverse audiences and channels. Its capabilities include strategic communications, public relations, and advocacy…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.