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Will The Bull Run Continue For Consulting Services Industry?

By Zacks Investment ResearchStock MarketsJan 09, 2020 08:39PM ET
Will The Bull Run Continue For Consulting Services Industry?
By Zacks Investment Research   |  Jan 09, 2020 08:39PM ET
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Consulting service providers have been witnessing a solid run over the past year. Substantial surge in service activities driven by economic strength and stability, globalization, consolidation and digitization have fueled consulting service providers’ growth.

However, high cost of domestic talent due to a competitive labor market coupled with difficulty in attaining foreign talent due to Trump’s stringent policies on immigration remains a headwind for consulting firms.

Industry on Solid Footing

The financial health of the consulting services industry bears testimony to the fact that the scenario has improved considerably despite talent-related headwinds. Consulting services is currently a multi-billion dollar space, marked by consistent revenue and profit growth. This has enabled most industry players to steadily increase dividends.

Global players are increasingly expanding in areas beyond the United States and Europe to other industrialized regions and growing economies. They have increased moves to take advantage of trends such as AI, analytics, cybersecurity and digital. So, acquisitions and technology investments are rampant.

The Zacks Consulting Services industry has grown 30.9% over the past year, outperforming the 24.3% rally of the Zacks S&P 500 composite. It carries a Zacks Industry Rank (the average of the Zacks Rank of all the member stocks) of #108, which places it in the top 43% of more than 250 Zacks industries. This indicates solid near-term growth prospects.

The Future Holds Good

The market is expected to experience strong growth driven by internationalization and growth of new areas such as design thinking, digital and cybersecurity.

Further, consulting skills include speed, agility, analytics, business process redesign, and customer experience. With higher speeds, incremental deliverables, and cloud technology, consulting services are becoming more and more customer centric. This should keep the demand environment healthy.

According to statista, the global management consulting market is expected to grow to $344.38 billion in 2025 from $295.88 billion in 2020.

Stocks That Warrant a Look

Over the past year, six major consulting companies have had an impressive run on the bourse. FTI Consulting (NYSE:FCN) , Accenture (NYSE:ACN) and Huron Consulting (NASDAQ:HURN) gained 69.4%, 40.2% and 35.4%, respectively. CBIZ (NYSE:CBZ) , CoreLogic (NYSE:CLGX) and CRA International (NASDAQ:CRAI) rallied a respective 34.2%, 28.7% and 27.9%.

Accenture is a Zacks Rank #2 (Buy) stock. The remaining companies mentioned herein carry a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The chart below shows year-to-date price performance of six major consulting services stocks compared with the industry and the Zacks S&P 500 composite.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

CoreLogic, Inc. (CLGX): Free Stock Analysis Report

Accenture PLC (ACN): Free Stock Analysis Report

FTI Consulting, Inc. (FCN): Free Stock Analysis Report

Charles River Associates (CRAI): Free Stock Analysis Report

Huron Consulting Group Inc. (HURN): Free Stock Analysis Report

CBIZ, Inc. (CBZ): Free Stock Analysis Report

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Will The Bull Run Continue For Consulting Services Industry?

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Will The Bull Run Continue For Consulting Services Industry?

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