Economic strength, encouraging service activities, increased adoption and the success of the work-from-home trend enable Zacks Consulting Services industry players to support the demand environment. Driven by these positives, investors interested in the industry would do well to consider including stocks like Booz Allen Hamilton Holding Corporation BAH, Stantec Inc. STN and CBIZ, Inc. CBZ in their portfolios.
About the Industry
Companies grouped under the Consulting Services category offer professional advice in management, IT, human resources, environmental regulations, logistics and marketing, and real estate, serving multiple end markets. The space includes prominent names such as Accenture and Gartner. The industry focuses on channeling money and efforts toward more effective operational components, such as technology, digital transformation and data-driven decision-making. To position themselves suitably in the post-pandemic era and better utilize the opportunities that an economic recovery will bring, service providers are increasing their efforts to formulate and reassess strategic initiatives, identify sources of demand and target end markets.
What's Shaping the Future of the Consulting Services Industry?
Exponential Growth: This multi-billion-dollar industry has witnessed exponential growth since the 2008 financial crisis, enjoying steady revenues, profit and cash-flow growth. Consequently, the trend has enabled most industry players to pay out stable dividends.
Economic Recovery: The sector is a major beneficiary of the broader economy and service activities. According to the Bureau of Economic Analysis, GDP grew 2.8% year over year in 2024. Economic activities in the non-manufacturing sector are in good shape. As of March, the Services PMI, measured by the Institute for Supply Management, had stayed above the 50% mark for the 55th time in 58 months since recovery from the pandemic.
Strong Demand Environment: The consulting services industry is one of those least affected by the pandemic and its after-effects. This is because even in a volatile situation, organizations require extensive advice on protecting their employees and staying closer to consumers and shareholders. This industry is one of the earliest pioneers of remote working that has become part of the new normal. The nature of work enables industry players to function efficiently through the increased use of technology.
Zacks Industry Rank Indicates Bright Prospects
The Consulting Services industry, housed within the broader Business Services sector, currently carries a Zacks Industry Rank #29. This rank places it in the top 12% of 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry's Price Performance
The Consulting Services industry has outperformed the S&P 500 composite and the broader sector in the past year. The industry has gained 1.4% against the S&P 500 composite’s decline of 2.2% and the broader sector’s fall of 3%.
One-Year Price Performance
Industry???s Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is a commonly used multiple for valuing consulting services companies, we see that the industry is currently trading at 24.04X, above the S&P 500’s 18.58X and the sector’s 20.88X.
Over the past five years, the industry has traded as high as 31.12X and as low as 26.58X, with a median of 26.5X, as the charts below show.
Price to Forward 12 Months P/E Ratio
3 Consulting Services Stocks to Consider
Stantec: The company provides professional services in the areas of infrastructure and facilities. It remains well-positioned for continued success, supported by industry resilience and effective internal strategies. The company benefits from strong macroeconomic and structural drivers while maintaining sharp execution on its projects, enabling margin expansion and earnings growth.
Stantec operates in a resilient sector shaped by long-term global needs, including water security, aging infrastructure, climate change response, advanced manufacturing and emerging technologies. These trends are expected to sustain strong project demand across regions.
Stantec’s consistent focus on high-quality project execution and addressing clients’ most urgent infrastructure and sustainability challenges supports steady growth. This disciplined approach continues to drive margin improvement and robust earnings performance. The Zacks Consensus Estimate for the company’s 2025 EPS increased 4.6% in the past 60 days to $3.61. STN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: STN
CBIZ: With its service breadth and specialized expertise, this provider of financial, insurance and advisory services has established itself as one of the largest professional services providers for middle-market businesses, solidifying its competitive edge and long-term growth potential.
CBIZ is entering a strong growth phase, fueled by strategic expansion and a reinforced market position. The integration of Marcum is expected to unlock new synergies, enhance service offerings, and strengthen relationships with clients and stakeholders. The Marcum transaction significantly expands CBIZ’s capabilities and client base, positioning the firm for broader market reach and cross-selling opportunities.
The Zacks Consensus Estimate for the company’s 2025 EPS has increased 23% in the past 60 days to $3.63. CBIZ currently sports a Zacks Rank #1.
Price and Consensus: CBZ
Booz Allen: The company offers management and technology consulting, analytics, engineering, digital solutions, mission operations and cybersecurity services to governments, businesses, and non-profit organizations both in the United States and internationally.
Decades of delivering mission-critical solutions have cemented Booz Allen’s reputation as a reliable contractor. Government agencies, particularly in defense and intelligence, require high levels of trust and confidentiality, areas where Booz Allen excels. This trust helps the company secure long-term, recurring contracts, allowing it to focus on innovation and efficiency without constantly seeking new clients. Multi-year contracts provide a steady revenue stream and reduce the company's exposure to market volatility. Government contracts are often renewed due to the sensitive nature of the services provided, such as defense and cybersecurity consulting, ensuring a consistent pipeline of business. Driven by these positives, BAH’s revenues have witnessed a compound annual growth rate of 7.4% from fiscal 2020 to fiscal 2024.
Booz Allen has strategically improved operational efficiency thanks to its focus on cost control, efficient project management and adjustment of its workforce based on demand, especially in managing government contracts and providing mission-critical services like cybersecurity, artificial intelligence (AI) and defense consulting. The company has also invested in digital transformation initiatives and data-driven solutions to enhance client offerings and streamline internal operations. BAH’s adjusted operating income surged 18.4% year over year in fiscal 2024, with adjusted operating income margin expanding around 30 basis points. We expect adjusted operating income to increase 10% in fiscal 2025, with adjusted operating income margin expanding around 10%.
The Zacks Consensus Estimate for the company’s fiscal 2025 EPS has increased 0.3% in the past 60 days to $6.25. BAH currently carries a Zacks Rank #2 (Buy).
Price and Consensus: BAH
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