FCN

ANALYST NOTE: FTI CONSULTING, INC. (FCN) DATE: 2026-06-13 CURRENT PRICE: $145.58

1. Structural Readiness

State: Context-only Conservative Entry: — Breakout Level: — Extension: —

Analysis:

2. Thesis Layer

Thesis Status: TACTICAL / Setup-Led Secular Exposure: None Named

As of 2026-06-13, there is no named secular thesis attached to FCN in this analysis. This is a tactical, setup-led evaluation. The conviction for this name must be derived entirely from the quality of the technical setup (which is currently undefined) and the strength of the underlying business fundamentals. No macroeconomic or industry-specific secular tailwinds are being invoked to drive the thesis at this specific moment. The analysis relies strictly on the company's operational performance and the structural readiness of the chart, neither of which currently presents a complete actionable signal.

3. The Business

Company Overview: FTI Consulting, Inc. is a global advisory firm dedicated to assisting organizations in navigating significant transitions, mitigating potential risks, and resolving intricate disputes. The company operates across five distinct segments: Corporate Finance & Restructuring, Forensic and Litigation Consulting, Technology, Strategic Communications, and Economic Consulting.

Business Model & Revenue Drivers: The company operates primarily on a "time and expense" contract model, where clients pay based on hours worked at contractually agreed-upon rates. This model provides visibility into revenue generation tied directly to billable hours and project scope.

Performance as of Q1 2026 (Source Date: 2026-04-30):

• Revenue Growth: First quarter 2026 revenues reached $983.3 million, an increase of $85.1 million (9.5%) compared to Q1 2025.
• Segment Performance: The revenue increase was primarily driven by higher revenues in Corporate Finance, Strategic Communications, and Technology. This growth was partially offset by lower revenues in the Economic Consulting segment.
• Turnaround & Restructuring: This segment saw growth driven by roles in major global bankruptcies, including Spirit Airlines, Saks, Prax Oil Refinery (U.K.), and Azul Airlines (Brazil).
• M&A and Transactional Work: The firm is advising on significant market consolidations, including Omnicom's merger with IPG, Skyworks Solutions' merger with Qorvo, and Lumen's sale of its fiber-to-the-home business to AT&T.
• Geographic Mix: For the year ended December 31, 2025, 63% of revenues were derived from U.S. locations, and 37% from international locations.
• Client Base: The firm serves 95 of the Fortune 100 companies and 82 of the top 100 private equity firms. No single client accounted for more than 10% of consolidated revenues in 2025.

Management Expectations (Recorded at Source Date 2026-04-30):

• Full Year Guidance: Management expects 2026 revenues to be between $3.94 billion and $4.1 billion, with EPS between $8.90 and $9.60.
• Expense Outlook: Management expects SG&A expenses for 2026 to be approximately $60 million higher than 2025 levels.
• Hiring Strategy: The company plans to add more senior professionals in 2026, having already announced 29 SMD and affiliate hires year-to-date in key geographies (Australia, Middle East) and adjacencies (transaction, transformation, public affairs, cybersecurity, data privacy, AI).
• Economic Consulting Outlook: Management stated that adjusted segment EBITDA in Economic Consulting has hit its low point for the quarter but noted there are "multiple quarters of work ahead" to return the P&L to preferred levels.

4. Archetype and Conviction

Archetype: Quality Compounder Rationale: FCN fits the "Quality Compounder" archetype based on its diversified service offerings, strong client franchise (Fortune 100/PE 300), and ability to generate revenue across multiple economic cycles (restructuring, M&A, crisis management). The business model is resilient, with demand driven by "disruption" (national security, cyber threats, AI risk, geopolitical shifts) rather than just pure economic expansion.

Valuation & Financial Context:

• Forward Consensus: As of 2026-06-12, the financial spine indicates a Forward Consensus EPS of $9.2575 for FY1 and $11.14577 for FY2.
• Margin Pressure: Adjusted EBITDA for Q1 2026 decreased 15.9% year-over-year to a margin of 9.8%, down from 12.8% in Q1 2025. This compression is attributed to the low point in Economic Consulting and the planned increase in SG&A expenses ($60M higher than 2025).
• Conviction Stack:
• *Thesis Strength:* Low (No named secular thesis; purely tactical).
• *Evidence Quality:* High (Strong Q1 growth, clear guidance, diverse client base).
• *Structural Quality:* Moderate (Margin compression is a headwind, but revenue growth is robust).
• *Setup Readiness:* None (Technical structure is undefined).
• *Rerating Potential:* Dependent on the resolution of the Economic Consulting margin dip and the successful execution of the $60M SG&A increase to drive future growth.

ATR Context: The current ATR is 4.0%, which falls into the "High" bucket (4–6%). This indicates elevated volatility, which is typical for a company navigating a margin inflection point and executing a hiring ramp-up. However, without a defined breakout level, this volatility cannot be utilized for position sizing in a technical setup context.

5. Invalidations, Strengths, and Gaps

What Would Strengthen the Case:

• Margin Recovery: Evidence in subsequent quarters that Economic Consulting EBITDA has recovered and the $60M SG&A increase is yielding higher top-line growth.
• Guidance Raise: Management raising the FY26 EPS or Revenue guidance above the current $8.90–$9.60 range.

What Would Invalidate the Case:

• Fundamental Deterioration: A miss on the $3.94B–$4.1B revenue guidance or a widening of the EBITDA margin beyond the current 9.8% without a clear path to recovery.
• Client Concentration Risk: A single client exceeding the 10% revenue threshold, indicating a loss of diversification.

Gaps in Evidence:

• Specific Catalyst Timing: While management mentions "multiple quarters" for Economic Consulting recovery, the specific timeline for margin normalization is not quantified in the provided evidence.
• Sector Classification: The specific sector and industry classification are not provided in the setup state, limiting peer-relative valuation analysis.

PRIVATE ANALYST CALL

Judgment: Hold Confidence: medium Key evidence: Q1 2026 revenue growth of 9.5% to $983.3M; Management guidance of $3.94B-$4.1B revenue and $8.90-$9.60 EPS; Strong client franchise with 95 Fortune 100 companies. Expected path: Management expects revenue growth to continue driven by M&A and restructuring, with SG&A costs rising to support hiring in AI and cybersecurity; EBITDA margins expected to recover as Economic Consulting work ramps up. Expected horizon: 3-6 quarters for margin normalization and technical setup formation. Failure mode to watch: A close below a defined support level (if formed) or a miss on FY26 guidance due to persistent margin compression.