FTI Consulting

FTI Consulting Inc earns a 5-star quantitative star rating, reflecting our opinion that this share class offers a compelling opportunity for investors. The stock currently trades at a 24% discount to our quantitative fair value estimate of $180.76 per share; however, some caution is warranted due to this estimate's medium uncertainty rating.

The company's profitability strengthens our estimated fair value. Highly profitable companies are often more resilient in recessions and are likely to generate stronger future cash flows for shareholders. For example, the firm's earnings yield of 6.8% sits in the top 40% compared with global peers. This suggests that it is generating substantial earnings relative to its share price, which contributes to our view that shares are cheap.

The company's valuation metrics are an additional encouraging factor. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's enterprise value to market value ratio of 1.3, a core component of valuation, sits in the top 40% compared with peers globally. While highly leveraged firms can be risky, they can also be highly rewarding. This company's high enterprise value relative to its market value suggests that wise investments will yield outsize returns for investors. This characteristic further promotes our favorable price/fair value ratio.

The company's narrow quantitative moat rating indicates it could outearn its cost of capital and maintain robust margins for 10 years or longer. In addition, the company's moderate financial health score is decent and doesn't seriously concern us with regard to financial distress.