Investment Thesis
FTI Consulting exhibits severe fundamental deterioration masked by positive net income, with operating cash flow of -$310M creating an untenable 368% divergence from reported earnings. Flat revenue, low single-digit profitability margins (5.9% net, 8.5% operating), and weak returns on equity (3.5%) and assets (1.6%) indicate structural profitability challenges despite manageable debt service metrics.
Strengths
- Exceptional interest coverage of 48.8x provides substantial debt service cushion
- Strong liquidity position with current ratio of 2.30x and $198.3M cash reserves
- Diluted EPS grew 5.5% YoY despite flat revenue, indicating cost discipline or share reduction
Risks
- Catastrophic negative operating cash flow of -$310M conflicts with $57.6M net income, suggesting unsustainable business model or major unrecorded liabilities
- Revenue stagnation (0.0% YoY growth) combined with depressed margins indicates competitive pressure and inability to grow or maintain pricing power
- Negative free cash flow of -$320.6M unsustainable long-term with $754.3M long-term debt; company burning cash despite profitability
Key Metrics to Watch
- Operating cash flow trend and working capital reconciliation to net income
- Revenue growth acceleration and margin expansion trajectory
- Debt reduction progress and refinancing needs given negative FCF generation
Financial Metrics
Revenue
983.3M
Net Income
57.6M
EPS (Diluted)
$1.90
Free Cash Flow
-320.6M
Total Assets
3.5B
Cash
198.3M
Profitability Ratios
Gross Margin
31.2%
Operating Margin
8.5%
Net Margin
5.9%
ROE
3.5%
ROA
1.6%
FCF Margin
-32.6%
Balance Sheet & Liquidity
Current Ratio
2.30x
Quick Ratio
2.30x
Debt/Equity
0.45x
Debt/Assets
52.6%
Interest Coverage
48.82x
Long-term Debt
754.3M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T17:35:10.234065 |
Data as of: 2026-03-31 |
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