On May 17, Zacks Investment Research downgraded business
Navigant Consulting Inc.
) to a Zacks Rank #5 (Strong Sell) from a Zacks Rank #4 (Sell)
primarily due to downward estimate revisions following its dull
first-quarter 2014 earnings results.
Despite the downtrend, the company still has the potential to drive
the stock up. The stock is currently trading at a forward P/E of
16.0x with a PEG ratio of 1.6x and long-term earnings growth
expectation of 10.0%.
Why the Downgrade?
Navigant reported unimpressive first-quarter results with revenues
and earnings declining year over year due to headwinds in core
markets. Net income from continuing operations was $10.4 million or
21 cents per share versus $13.1 million or 26 cents per share in
the year-ago quarter.
Excluding one-time items, adjusted earnings for the reported
quarter were 20 cents per share compared with 26 cents per share in
the prior-year period. The adjusted earnings missed the Zacks
Consensus Estimate by a couple of cents for a negative earnings
surprise of 9.1%.
Total revenue was down 5.6% year over year to $197.7 million while
revenues before reimbursements (RBR) decreased 4.4% to $175.1
million in the reported quarter. The decrease in first-quarter 2014
revenues was attributable to lower RBR in the Disputes,
Investigations & Economics segment; Financial, Risk &
Compliance; and Energy segment.
Over the last 7 days, all the earnings estimates for Navigant were
revised downward for 2014 as well as for 2015. This seems to be
fallout of lackluster results in the recently reported quarter.
Navigant continues to face challenges on both the domestic and
international fronts. This is primarily attributable to the
difficulties in managing and staffing foreign operations,
relatively limited new assignments, currency fluctuations and
regulatory stringencies due to the uncertainty in the global
Other Stocks to Consider
Other stocks that look promising and are worth looking into now
Huron Consulting Group Inc.
The Hackett Group, Inc.
), each carrying a Zacks Rank #2 (Buy).
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