First-read — FTI Consulting (FCN) — 2026-05-25

1. Why it surfaced

Today's daily-scan flagged FCN as the Tier 1 candidate of the day on the strength of a clean insider cluster buy: three senior executives (including CFO Eun Nam and CSO Paul Linton) purchased ~14,400 shares for ~$2.08M at an average ~$144.21 on May 13, 2026, within days of a fresh 52-week low of $140.835 T3. The price weakness traces to a Q1 EPS miss ($1.90 actual vs. $2.11 consensus) T3; the stock is currently ~$148.63 vs. the 52w high of $189.30 (−22%) T3. Dislocation magnitude is moderate — this is an earnings-miss reset in a high-quality compounder, not a forced-seller event.

2. Business in a paragraph

FTI Consulting is a business-advisory franchise organized in five segments — Corporate Finance & Restructuring (the largest, ~35% of revenue), Forensic & Litigation Consulting, Economic Consulting, Technology (e-discovery), and Strategic Communications. The economics are people-heavy: revenue scales with billable-hour utilization across ~7,000 senior professionals and ex-government, ex-judicial, and ex-Big-Four hires whose names are the product T2. Customers are corporates in distress, law firms in litigation, governments in regulatory investigations, and PE firms in deal diligence — engagements that are high-stakes, repeat-business-prone, and largely insensitive to price. The recent trajectory is one of solid mid-single-digit organic growth (FY2024 revenue $3.7B, +9% YoY) followed by a Q1 2026 stumble that management has attributed to project-mix and timing T2. The franchise sits in the small cohort of professional-services businesses where reputation, switching costs (a regulator-facing engagement does not change advisors midstream), and the inability of clients to assess advisor quality ex-ante combine to produce durable economics — close in character to expert-witness firms and Big-Three strategy consultancies.

3. Back-of-envelope valuation

Normalized to recent operating trajectory, the EPV-only floor sits meaningfully below current price.

The EPV-only floor at ~$105 means current price embeds ~40% of franchise-quality / growth premium above pure no-growth replacement value. Even granting Greenwald-style EPV-plus-growth treatment (the new doctrine default when gating tests pass — see earnings-power-value-greenwald), the franchise multiple needed to justify $148.63 is in the 14-16x earnings range, which is at the upper end of where consulting franchises trade through-cycle. No margin of safety on the EPV-only test, even with conservative-to-generous WACC.

4. The one thing that decides this

The hinge question: Is the Q1 miss the leading edge of a multi-quarter restructuring upcycle (insider thesis), or the first quarter of a normalization away from the 2020-2024 distressed-debt and post-COVID-litigation tailwind? FTI is counter-cyclical in its largest segment (Corporate Finance & Restructuring eats well when corporates go bust) and pro-cyclical in Strategic Comms and Tech, with Litigation roughly cycle-neutral. The cluster insider buy is a credible signal that management sees pipeline data (engagement letters signed but not yet billed) that supports a Q2/Q3 inflection — but insider buys can also reflect insider conviction about long-term franchise quality at any price, which would not give us a useful timing signal. The hinge is observable: the next two prints (Q2 in early August, Q3 in early November) will show whether CFR backlog and headcount-utilization metrics are inflecting up. That's a 2-quarter wait, not a multi-year one.

5. Top risk

Top risk: the consulting cycle is topping, not bottoming. The 2020-2024 period was unusually rich for FTI's flagship CFR segment (COVID-era bankruptcies, then 2022-2023 regional-bank distress, then 2024 commercial-real-estate workouts), and the pipeline could roll over even as the broader corporate-credit cycle continues. If Q2 and Q3 prints show CFR margins compressing further on top of the Q1 miss, the franchise re-rates to ~10-11x earnings (peer historical low), implying ~$95-105 share price — exactly where EPV-only puts the floor. The insider buy is small enough in dollar terms ($2.08M total across three executives) that it could prove to be opportunistic share-of-pocket buying near a round-number low rather than a high-conviction information event.

6. Decision

Decision: shelve-with-trigger. Trigger 1: price ≤ $115 (intraday or close), which would establish ~10% MoS to the EPV-only floor and make the insider-buy signal a co-investment opportunity rather than a re-rating bet. Trigger 2: Q2 print (early August) confirming organic-revenue growth resumption and CFR-segment inflection — that would change the question from "is the EPV intact" to "is growth durable," and the back-of-envelope would move up materially. Horizon: 2 quarters (through Q3 2026 print). Rationale: the franchise is real and the signal is clean, but the EPV-only test does not support a full thesis at this price, and the doctrine (02-philosophy-deep-value) is explicit that we wait for the price or the data rather than reach. Pass would be too harsh given the franchise quality and the cluster-buy signal; continue would over-commit research capacity on a name that fails the kit's primary valuation gate today.

Sources

• FTI Consulting Insider Buying Cluster — Holdings Channel, 2026-05-14 T3
• FTI Consulting CFO Nam buys $289,180 — Investing.com, 2026-05 T3
• Insider Buying: Paul Linton Acquires Shares of FCN — Gurufocus, 2026-05 T3
• FTI Consulting Hits New 52-Week Low — Daily Political, 2026-05-15 T3
• Daily scan that surfaced this name: 2026-05-25-AM

Verification gaps for any future thesis pass

Items the back-of-envelope had to estimate; a full thesis must verify:

• Exact normalized share count from latest 10-Q cover page T1
• Latest balance-sheet cash/debt position T1
• Form 4 details on the cluster buy (dates, amounts, cost basis) from SEC EDGAR T1
• CFR segment backlog disclosure (if any) from latest 10-Q T1
• Peer consulting multiples (HURN, ICFI, BAH) for cross-check T2
• Damodaran industry beta and cost-of-equity inputs as of 2026 update T2

Linked

• first-read-standard — methodology this first-read follows
• sources-policy — citation discipline
• earnings-power-value-greenwald — valuation framework applied
• margin-of-safety-pricing — bands invoked for shelve trigger
• incentive-alignment-and-comp — interpretation framework for insider cluster-buy signal (the kit's current home for insider-activity reading; a dedicated insider-signal-decoding skill is queued in Backlog)
• Rules — Tier 1 decision authority for shelve-with-trigger
• Source scan: 2026-05-25-AM