Should Investors Buy FCN as Growth Offsets Rising Margin Pressure?

FTI Consulting, Inc. FCN is growing across several practices, but that momentum is not flowing cleanly to profitability. Second-quarter 2026 revenues rose 5.3% year over year while adjusted EBITDA declined 6.4%.

That split defines the investment case. A valuation below FCN's historical norm and a favorable earnings outlook offer support, but higher costs and uneven event-driven demand leave limited room for execution missteps.

FCN's Growth Base Is Broadening

Corporate Finance revenues increased 8.5% year over year in the second quarter, Technology advanced 18.4% and Forensic and Litigation Consulting rose 4.1%. Strategic Communications revenues also increased 5.4% excluding pass-through revenues.

The breadth matters because FCN is not relying on one practice for growth. Corporate Finance also grew 13.6% in the first half of 2026, while Technology advanced 11.4%, reinforcing the case for a diversified revenue base.

FTI Consulting's Margins Face a Cost Test

Adjusted EBITDA fell to $104.5 million in the second quarter from $111.6 million a year earlier. The adjusted EBITDA margin contracted to 10.5% from 11.8% as higher direct costs and selling, general and administrative expenses outweighed revenue growth.

Selling, general and administrative expenses increased to $230.7 million from $202.2 million, reflecting higher compensation, travel and entertainment and legal expenses. Management now expects 2026 expenses in this category to be roughly $70 million above 2025, versus its earlier expectation of a $60 million increase.

FCN's Valuation Looks Reasonable, Not Cheap

FCN trades at 14.6X forward 12-month consensus EPS estimate, in line with 14.6X for the Zacks sub-industry. The stock's five-year median is 21.8X, so the current valuation is well below its own historical norm.

                                                                       Image Source: Zacks Investment Research

That discount offers some support, but the near-peer valuation leaves less protection if margins disappoint. Huron Consulting Group Inc. HURN, another consulting peer, reported 15.7% second-quarter growth in revenues before reimbursable expenses and raised its 2026 guidance.

FTI Consulting's Event-Driven Demand Adds Risk

Management described the restructuring market as softer in the first half of 2026 and said global regulatory scrutiny felt less intense than before. Gaps between major cases in the U.K. and geopolitical disruption in the Middle East added further variability.

CRA International Inc. CRAI, which operates as Charles River Associates, reported 12.8% fiscal second-quarter revenue growth and raised full-year revenue guidance. That peer strength provides another reference point for consulting demand while FCN continues to manage engagement timing and mix.

FCN's Earnings Outlook Still Has Upside

Management reaffirmed 2026 revenue guidance of $3.94-$4.10 billion. The Zacks Consensus Estimate for 2026 revenues is $3.98 billion, implying about 5% growth from 2025 despite the softer demand pockets and elevated expense base.

The consensus estimate calls for earnings of $9.25 per share in 2026 and $11.05 in 2027. That trajectory points to stronger earnings growth next year if utilization improves and cost pressure moderates.

FCN's Signals Favor Patience Over Chasing

The current setup favors patience. FCN has broad revenue growth and a valuation well below its historical median, but margin compression, higher selling, general and administrative expenses and event-driven demand make the near-term risk-reward less decisive.

The stock carries a Zacks Rank #3 (Hold), which supports a wait-and-see stance rather than an aggressive new position. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FTI Consulting’s VGM Score of A and Value Score of A, along with a Growth Score of B and Momentum Score of B, indicate favorable underlying style characteristics even as the Zacks Rank remains #3.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research