Consulting services is one of the industries least affected by the pandemic. This is because even in a volatile situation, organizations require extensive advice on how to protect their employees, and stay closer to consumers and shareholders. The multi-billion-dollar industry has witnessed exponential growth since the 2008 financial crisis, enjoying a steady rate of revenues, profits, and cash-flow growth.

The Zacks-defined consulting services industry is currently in the top 36% of the Zacks Industry Rank. Year to date, the industry has provided 22.7% returns, well above the 17.2% return provided by the market’s benchmark — the S&P 500 Index. Since it is ranked in the top half of Zacks Ranked Industries, we expect the consulting services industry to outperform the market over the next 3 to 6 months.

The industry is in good shape, driven by a healthy demand environment for services. The U.S. economy remains solid despite the continuous hiking of interest rate in the last one and a half years by the Fed. This industry is one of the pioneers of remote working, which has become part of the new normal. The nature of work enables industry players to function efficiently through the increased use of technology.

With the end of the pandemic, the focus of the industry is currently on channeling money and efforts to more effective operational components, such as high-end technology, digital transformation, and data-driven decision-making.

Services are becoming more customer-centric through higher speed, incremental deliverables, and cloud technology. So, the consulting services industry is likely to witness healthy growth on internationalization and expansion of newer verticals, such as design thinking, digital and cybersecurity.

According to NMS Consulting, the market size of the management consulting industry is estimated to reach $330 billion globally in 2023. In the United States the industry has reached $65 billion with a growth rate of 7.7% per annum.

Stocks in Focus

At this stage, several stocks look attractive for future growth. However, a three-pronged picking method will make the task easy. First, select stocks with strong revenue and earnings potential for the rest of 2023. Second, these stocks have seen positive earnings revisions in the last 60 days. Third, each of our picks carries either a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Huron Consulting Group Inc. HURN is the parent company of Huron Consulting Services LLC, an independent provider of financial and operational consulting services. HURN’s experienced and credentialed professionals use their expertise in accounting, finance, economics, and operations to serve a wide variety of both financially sound and distressed organizations. HURN operates through three segments: Healthcare, Education, and Commercial.

Zacks Rank #1 Huron Consulting Group has an expected revenue and earnings growth rate of 17% and 31.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 9.4% over the last 60 days.

Accenture plc ACN has been steadily gaining traction in its outsourcing and consulting businesses backed by high demand for services that can improve operating efficiencies and save costs. ACN has been strategically enhancing its cloud and digital marketing suite through buyouts and partnerships. ACN’s strong operating cash flow has helped it reward shareholders in the form of dividend payments and share repurchases, and pursue opportunities in areas that show true potential.

Zacks Rank #2 Accenture has an expected revenue and earnings growth rate of 4.5% and 6.7%, respectively, for the current year (ending August 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days.

Franklin Covey Co. FC provides training and consulting services in the areas of execution, sales performance, productivity, customer loyalty, and educational improvement for organizations and individuals worldwide. FC operates through three segments: Direct Offices, International Licensees, and Education Practice. FC also provides a suite of individual-effectiveness and leadership-development training and products.

Zacks Rank #3 Franklin Covey has an expected revenue and earnings growth rate of 10.5% and 32.1%, respectively, for the current year (ending August 2024). The Zacks Consensus Estimate for current-year earnings has improved 11.6% over the last 60 days.

.Stantec Inc STN provides professional consulting services in the areas of infrastructure and facilities to the public and private sectors clients in Canada, the United States, and internationally. STN provides consulting services in engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics.

STN also offers planning and design consulting services to clients in residential, logistics, retail, infrastructure, energy, higher education, and urban regeneration sectors; architectural and interior design, and planning services in the science and technology, commercial workplace, higher education, residential, and hospitality markets.

Zacks Rank #3 Stantec has an expected revenue and earnings growth rate of 7.5% and 13.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days.

Charles River Associates (CRAI) has a widely-diversified business with service offerings across areas of functional expertise, client base and geographical regions. Solid international network provides CRAI the opportunity to work with the world’s leading professionals on multiple issues. CRAI’s professional team has helped it maintain solid reputation of premium consulting services.

Zacks Rank #2 Charles River Associates has an expected revenue and earnings growth rate of 5.3% and 12.8%, respectively, for the next year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days.
Accenture PLC (ACN): Free Stock Analysis Report

Charles River Associates (CRAI): Free Stock Analysis Report

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

Stantec Inc. (STN): Free Stock Analysis Report

Franklin Covey Company (FC): Free Stock Analysis Report

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