Should You Buy Navigant Consulting, Inc (NYSE: NCI) Now?

in INVESTING IDEAS by

Navigant Consulting, Inc (NYSE: NCI) investors have enjoyed seeing the stock price increase by 15.5% over the last month. As a small-cap stock with decent coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at the company’s expected growth and valuation based on its most recent financial data to see if there is further upside moving forward.


What Is Navigant Consulting Worth?

Welcoming news for investors, Navigant Consulting is still trading at a fairly cheap price. According to our 10 valuation analyses, the intrinsic value for the stock is $28.28 per share and is currently trading at $24.75 in the market. This means that there is still an opportunity to buy now.

Navigant Consulting, Inc Valuation Detail
Analysis Model Fair Value Upside (Downside)
10-yr DCF Revenue Exit $28.19 13.9%
5-yr DCF Revenue Exit $27.56 11.4%
Peer Revenue Multiples $27.35 10.5%
10-yr DCF EBITDA Exit $31.73 28.2%
5-yr DCF EBITDA Exit $32.27 30.4%
Peer EBITDA Multiples $26.98 9.0%
10-yr DCF Growth Exit $28.64 15.7%
5-yr DCF Growth Exit $28.15 13.8%
Peer P/E Multiples $28.50 15.2%
Earnings Power Value $23.45 -5.2%
Average $28.28 14.3%

Click on any of the analyses above to view the latest model with real-time data.

Navigant Consulting’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta of 0.58. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.


How Much Growth Will Navigant Consulting Generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations.

Navigant Consulting projected revenue chartsource: finbox.io data explorer

With Navigant Consulting’s relatively muted top-line growth of 2.4% expected over the next five years on average, growth doesn’t seem like a key catalyst for a buying decision, at least in the short to medium-term.


Next Steps

While many investors tend to categorize stocks as either value or growth plays, the most successful investors view growth in conjunction with a company’s value. Take legendary investor Peter Lynch for example, who is widely known for popularizing the term growth at a reasonable price (GARP).

GARP is a strategy that combines aspects of both growth and value investing techniques by finding high growth companies that don’t trade at overly high valuations. In the application of this strategy, Lynch achieved 29% annualized returns as the manager of Fidelity’s Magellan Fund from 1977 to 1990. Needless to say the importance of analyzing a company’s fair value in addition to its growth prospects.

Although Navigant Consulting’s future growth is relatively low, the company’s stock still appears to be trading at a discount to its intrinsic value. Therefore, it may be a great time to purchase shares or add more to your existing holdings.

However, if you have not done so already, I highly recommend you complete your research on Navigant Consulting by taking a look at the following:

Efficiency Metrics: fixed asset turnover is calculated by dividing revenue by average fixed assets. View Navigant Consulting, Inc’s fixed asset turnover here.

Risk Metrics: how much interest coverage does Navigant Consulting, Inc have? This is a ratio used to assess a firm’s ability to pay interest expenses based on operating profits (EBIT). View the company’s interest coverage here.

Valuation Metrics: what is Navigant Consulting, Inc’s short ratio and how does it compare to its publicly traded peers? It represents the percentage of total shares outstanding that is being shorted. View the short ratio here.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.