FTI Consulting (FCN) reported Q1 2026 on April 30. Its Economic Consulting segment swung to negative adjusted EBITDA, gross margin fell from 23.0% to 11.7%, and management cited "lower demand for non-M&A-related antitrust services" — a federal enforcement pullback story.
CRA International (CRAI) reported Q1 FY2026 on May 7. Same business model, same forgivable-loan amortization line item flagged in management commentary as a sectoral cost pressure. Revenue +10.5%, utilization 76% to 77%, consultant headcount up 24 net. CRAI MD&A makes no mention of federal enforcement pullback or non-M&A antitrust demand weakness.
The market sold both during the trailing year. Only one company is reporting deterioration.
What the filings say
FCN Economic Consulting Q1 2026: revenue $175.6M (-2.3% reported, -5.7% ex-FX), adjusted EBITDA -$5.9M vs +$14.4M PY, gross profit margin 11.7% vs 23.0%. MD&A attributes the GP collapse to "higher forgivable loan amortization, variable compensation and outside consultant expenses as a percentage of revenues" plus "lower demand for our non-M&A-related antitrust services."
CRAI Q1 FY2026: revenue $201.0M (+10.5%), utilization 77% (+1pp YoY), consultants 971 vs 947 (+24 net). Costs of services +20.4% on revenue +10.5% — same forgivable loan amortization pressure ($10.2M increase explicitly cited), absorbed through utilization gains and revenue growth. MD&A silent on federal enforcement pullback.
Read together: the cost pressure is sectoral. The demand-side weakness is FCN-specific.
What the market thinks
CRAI has given back 24.5% over the trailing year, RSI at 30.3, P/E 19.4x. Idio variance ~34% (above the consulting-sector closet-indexer threshold but below the 75% pure-idio target). At trailing P/E and FY26 consensus, fair value lands roughly $120-180 across plausible utilization and growth bands. Current price sits in the lower half of that range despite a Q1 print at the upper-bound trajectory.
FCN shows IV rank 94%, P/C ratio 10.40, 752 OI on the $125 puts. Market is pricing a binary on FCN's separate $45.6M unexplained corporate legal expense, plus the segment-level deterioration.
Why the gap exists
Two factors keep this discriminator out of consensus.
First, the cross-check requires reading two 10-Qs in parallel. FCN is a five-segment consulting holding company with broader sell-side coverage; Economic Consulting is one quarter of FCN revenue and rarely gets isolated attention. CRAI is a smaller pure-play with thinner coverage. Single-name coverage doesn't surface a same-quarter comparison.
Second, the MD&A asymmetry is the diagnostic. Only FCN cited "federal enforcement pullback" and "non-M&A antitrust" demand decline. CRAI, which would face the same DOJ Antitrust Division docket and the same FCPA enforcement environment, did not flag any equivalent headwind. When peers do not echo a named external headwind, the headwind is more likely company-specific than sectoral.
CRAI is the share-taker through the period. The market has not separated the Q1 print from the trailing year of sector sentiment that drove the stock down 24.5%.
Risks (ranked by impact)
- Federal enforcement pullback eventually hits CRAI's competition practice. CRAI's competition work is more diversified than FCN's (mergers, financial markets, life sciences) but is not immune. Watch for the language to appear in any future CRAI MD&A.
- Utilization rolls over. Forgivable loan amortization is the sectoral cost driver. Revenue growth absorbs it; declining utilization would not. CRAI Q2 utilization below 75% would trigger margin compression similar to FCN.
- Strategic event truncates the path. CRAI is a mid-cap consulting acquisition candidate; an unsolicited offer at a low premium would cap upside.
Catalysts
- CRAI Q2 FY2026 print, ~early August 2026. Revenue ≥+5% YoY confirms momentum durability (pred-ead154, P=65%).
- FCN Q2 2026 print, ~mid-August. FCN Economic Consulting adjusted EBITDA staying ≤ $0M (pred-bi0pfz, P=62%) widens cohort divergence.
- Any 8-K disclosing FCN's $45.6M legal matter. Resolves the FCN binary; the discriminator alpha at CRAI is independent of this.
What would change our mind
- CRAI Q2 FY26 revenue flat or negative.
- CRAI Q2 utilization below 75%.
- CRAI MD&A in any future quarter cites federal enforcement pullback as a demand headwind.
- Three or more cohort peers (FCN, CRAI, plus one other consulting/economic-research vehicle) show similar GM compression with revenue declines, reframing federal enforcement pullback as sectoral rather than FCN-idio.
Evidence
| Evidence | Source | Credibility | LR |
|---|---|---|---|
| FCN Economic Consulting Q1 2026 adj EBITDA -$5.9M vs +$14.4M PY; GP margin 11.7% vs 23.0%; MD&A cites "lower demand for non-M&A-related antitrust services" | FCN 10-Q 2026-04-30, Segment Results | 0.95 | 0.7 |
| CRAI Q1 FY2026 revenue $201.0M (+10.5%), utilization 77% (+1pp), consultants 971 vs 947; same forgivable loan amortization pressure ($10.2M increase) absorbed through growth | CRAI 10-Q 2026-05-07, MD&A | 0.95 | 1.3 |
| FCN Strategic Communications Q1 2026 revenue +18.4% (+14.5% ex-FX), op income +139%, GM 39.2% (+4.4pp); demand drivers "corporate reputation, public affairs, financial communications" | FCN 10-Q 2026-04-30, Segment Results | 0.95 | 1.6 |
| FCN Corp Finance & Restructuring +19.2% rev, +108% op income, util 62% vs 57% — PJT +28.9%, HLI FR +19.3%, HURN total RBR +12.1% confirms cycle is sectoral | FCN, PJT, HLI, HURN 10-Qs Q1 2026 | 0.95 | 1.2 |
| FCN unallocated corporate expense +131% to $45.6M with cited "increase in legal expenses"; specific matter not identified; 8-K search returned no public disclosure | FCN 10-Q 2026-04-30, Segment Results + EDGAR 8-K search | 0.90 | 0.8 |
| STGW Communications Q1 2026 +6.4% organic, op margin +5.2pp — cohort floor for corporate-reputation demand; FCN's +14.5% ex-FX represents share capture above floor | STGW 10-Q 2026-05-01, MD&A | 0.95 | 1.2 |
| Q1 2026 advisory cohort: PJT +28.9%, HLI FR +19.3%, FCN CF +19.2%, HURN total +12.1%; LAZ -2.5% outlier (M&A-completion mix); PJT MD&A explicit on PE sponsor liability management | PJT, HLI, LAZ, HURN, FCN 10-Qs Q1 2026 | 0.95 | 1.3 |