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The Hackett Group (HCKT)
NASDAQ:HCKT
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The Hackett Group
(NASDAQ:HCKT)
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Rating:52Neutral
Price Target:
$14.00
▼(-0.64% Downside)
Action:ReiteratedDate:02/28/26
The score is driven primarily by weakening 2025 fundamentals (profitability decline and higher leverage despite solid cash generation) and bearish technicals (price below key moving averages with negative MACD). Valuation is mixed (good yield but higher P/E), while the earnings call points to a credible GenAI/platform strategy but near-term guidance and margin pressure keep risk elevated.
Positive Factors
Strong cash generation
The company has delivered positive operating and free cash flow across periods and reported $19.1M operating cash in the quarter. Persistent cash generation supports funding of platform investments, dividends and buybacks, improving strategic optionality during the GenAI pivot and cushioning cyclical pressure.
GenAI platform and IP buildout
A strategic pivot to licensable GenAI platforms and the LeewayHertz acquisition create pathways to higher-margin, recurring license revenue. Platform IP and agentic engineering increase differentiation, enabling scalable delivery and long-term margin improvement if adoption and monetization continue to expand.
Durable SAP segment growth
Material, sustained SAP growth reflects structural demand for S/4HANA cloud migrations and software sales. This segment strength diversifies revenue mix, supports higher-margin license and implementation work, and provides a repeatable revenue stream that can offset cyclical weakness in other segments.
Negative Factors
Rising leverage and weaker equity cushion
Leverage moved meaningfully higher in 2025 as debt increased and equity fell, reducing balance-sheet flexibility. Higher indebtedness limits capacity for opportunistic investments, raises financing risk if cash flow weakens, and amplifies downside during the company's platform transition period.
Margin and profitability compression
Material margin contraction and lower adjusted EBITDA reflect mix shifts, higher SG&A and incremental commissions. Sustained margin pressure would impair free cash flow conversion and limit reinvestment in platforms, making it harder to fund recurring revenue growth without further cost discipline or scale.
Choppy revenue and segment declines
Revenue volatility and notable declines in core segments show demand and execution risks during the AI transition. Persistent choppiness can delay platform monetization, hinder predictable recurring revenue growth, and pressure operating leverage as the company shifts delivery models.
The Hackett Group (HCKT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$352.28M
Dividend Yield2.41%
Average Volume (3M)219.84K
Price to Earnings (P/E)42.1
Beta (1Y)0.81
Revenue Growth0.68%
EPS Growth-67.84%
CountryUS
Employees1,618
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.40
Shares Outstanding25,380,428
10 Day Avg. Volume176,523
30 Day Avg. Volume219,838
Financial Highlights & Ratios
PEG Ratio-0.75
Price to Book (P/B)8.01
Price to Sales (P/S)1.78
P/FCF Ratio16.81
Enterprise Value/Market Cap1.26
Enterprise Value/Revenue1.45
Enterprise Value/Gross Profit3.79
Enterprise Value/Ebitda15.45
Forecast
1Y Price Target
$23.67Price Target Upside67.99% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)1.69
Revenue Forecast (FY)$294.50M
The Hackett Group Business Overview & Revenue Model
Company DescriptionThe Hackett Group, Inc. operates as a strategic advisory and technology consulting firm primarily in North America and internationally. It offers best practice intelligence center, an online searchable repository; best practice accelerators that provide web-based access to best practices, customized software configuration tools, and best practice process flows; advisor inquiry for access to fact-based advice on proven approaches and methods; best practice research that provides insights into the proven approaches; and peer interaction comprising member-led webcasts, annual best practice conferences, annual member forums, membership performance surveys, and client-submitted content, as well as intellectual property as-a-service and Hackett Institute programs. The company's benchmarking services conduct studies for selling, general and administrative, finance, human resources, information technology, procurement, enterprise performance management, and shared services; and business transformation practices to help clients develop coordinated strategy for achieving performance enhancements across the enterprise. It also provides Oracle EEA solutions for core financial close and consolidation, integrated business planning, and reporting/advanced analytics areas. In addition, the company offers SAP solutions, including planning, architecture, and vendor evaluation and selection through implementation, customization, testing, and integration; post-implementation support, change management, exception management, process transparency, system documentation, and end-user training; off-shore application development, and application maintenance and support services; and OneStream practice that helps clients choose and deploy OneStream XF Platform and Market Place solutions. The company was formerly known as Answerthink, Inc. and changed its name to The Hackett Group, Inc. in 2008. The Hackett Group, Inc. was founded in 1991 and is headquartered in Miami, Florida.
How the Company Makes MoneyThe Hackett Group generates revenue primarily through its consulting services, which include strategic advisory, performance benchmarking, and managed services. The company typically charges clients on a project basis for its consulting engagements, which can range from short-term projects to long-term partnerships. Key revenue streams include fees from consulting projects, subscription-based services for access to its proprietary research and benchmarking data, and managed services contracts. Additionally, Hackett collaborates with various technology partners to enhance its offerings, leveraging these relationships to provide integrated solutions that drive additional revenue and client engagement.
The Hackett Group Earnings Call Summary
Earnings Call Date:Feb 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Neutral
The call balanced solid operational highlights—beating guidance, strong SAP growth (+32% YoY), platform licensing rollout, strategic partnerships, and healthy operating cash flow enabling buybacks—with notable near-term challenges including declines in Global S&BT (-11% YoY) and Oracle (-20% YoY), margin and adjusted EBITDA compression, increased leverage from share repurchases, and expected AI transition charges. Management emphasized a strategic pivot to GenAI platforms that may drive higher-margin, recurring license revenue over time, but near-term guidance and margin headwinds indicate a transitional period with both opportunities and execution risks.Q4-2025 Updates
Positive Updates
Revenue and EPS Beat Guidance
Total revenues before reimbursements of $74.8M in Q4 FY2025, which exceeded the high end of company guidance; adjusted diluted EPS of $0.40, at the high end of quarterly guidance.
Strong SAP Segment Growth
SAP Solutions revenues of $22.2M in Q4, an increase of 32% year-over-year, driven by strong software sales and S/4HANA cloud migrations and coupled with significant implementation fees.
GenAI Platform & IP Momentum
Launched a licensable AI XPLR version 5 and a full suite of GenAI-enabled platforms (AI XPLR, XT, AIX, Ask Hackett); acquisition of LeewayHertz expanded agentic engineering capabilities and platform innovation—positioning the company to generate new, higher-margin, platform-based revenues.
Partnerships and Go-to-Market Progress
Six-month demonstration with a global technology/consulting company described AI XPLR as 'game changing' with a near-term go-to-market collaboration expected; planned go-to-market pilot with ServiceNow and continued work with Celonis process-mining integrations.
Recurring Revenue and Platform Monetization
Approximately 22% of total company revenues before reimbursements are recurring multiyear and subscription-based (Executive Advisory, AMS and GenAI license contracts); licensing of AI XPLR and module-based offerings expected to drive additional recurring revenue opportunities.
Cash Generation and Capital Return
Net cash provided by operating activities of $19.1M in the quarter; cash balance increased to $18.2M from $13.9M last quarter; used strong cash/credit to repurchase ~2.1M shares for ~$42M and the Board increased buyback authorization to $25M total; declared Q1 dividend of $0.12/share.
Productivity Gains from New Platforms
Management reported early delivery productivity improvements from XT and AIX platforms with potential productivity improvements in excess of ~25% on some engagements, which should support margin expansion as platform-led delivery scales.
Negative Updates
Global S&BT Revenue Decline
Global S&BT segment revenues were $38.6M in Q4, down 11% year-over-year, reflecting demand disruption during the transition to AI-enabled services.
Oracle Segment Weakness
Oracle Solutions revenues declined to $14.0M in Q4, down 20% year-over-year, although management expects sequential improvement with AIX deployment.
Margin and Profitability Compression
Adjusted gross margin declined to 46.6% from 47.7% year-over-year; adjusted EBITDA decreased to $15.9M (21.3% of revenues) from $19.5M (25.2% of revenues) in prior year, indicating margin pressure.
Adjusted EPS & SG&A Trends
Adjusted diluted EPS declined to $0.40 from $0.47 prior year; adjusted SG&A rose to $20.0M (26.7% of revenues) from $18.4M (23.7% of revenues), driven primarily by incremental commissions tied to increased SAP license sales.
Increased Leverage to Fund Buyback
The company borrowed a net $32M from its credit facility to fund the tender offer; total outstanding debt at quarter-end was $76M, increasing leverage despite cash generation.
Higher DSO and Working Capital Dynamics
Days sales outstanding (DSO) rose to 71 days in Q4 versus 66 days in the prior year, and accounts receivable increases partially offset operating cash flow drivers.
Near-Term Transition Charges and Potential Headcount Impact
Company expects AI transition charges in Q1 2026 of approximately $1.0M–$1.5M related to severance and headcount reductions due to platform-led delivery and indicated that additional charges may be incurred during 2026.
Modest Q1 Revenue Guidance and Margin Pressure
Guidance for Q1 2026 of $70.5M–$72.0M (sequentially lower than Q4), expected adjusted gross margin of ~44%–45% (down from 46.6%) and adjusted diluted EPS guidance of $0.34–$0.36, reflecting near-term softness and higher tax rate impact (~$0.04 per share headwind).
Company Guidance
For Q1 2026 the company guided total revenues before reimbursements of $70.5 million to $72.0 million and adjusted diluted net income per share of $0.34–$0.36 (assuming a GAAP effective tax rate on adjusted earnings of 26.3% vs. 20.1% in Q1 last year, an unfavorable tax impact of ~ $0.04 per share); it expects adjusted gross margin of ~44%–45%, adjusted SG&A and interest expense of approximately $20 million, and adjusted EBITDA of roughly 19.5%–20.5% of revenues. Management noted Q1 AI transition charges of about $1.0–$1.5 million (severance) that will be excluded from adjusted results, warned of seasonality-driven sequential increases in U.S. payroll taxes and vacation accruals, said Global S&BT and Oracle are forecast to be down year‑over‑year but up sequentially from Q4 while SAP is expected to remain up year‑over‑year, and cautioned that cash balances (excluding buybacks) will be tempered by payment of 2025 performance bonuses and employee tax withholding; by comparison, Q4 revenue before reimbursements was $74.8 million with adjusted diluted EPS of $0.40.The Hackett Group Financial Statement Overview
Summary
Cash flow remains a relative strength (positive operating and free cash flow across periods), and gross margin has been fairly stable, but 2025 showed clear deterioration: revenue declined, profitability weakened with margin compression, and leverage increased while equity fell—raising financial risk versus 2021–2024.Income Statement
Revenue has been choppy: modest growth in 2021–2024, followed by a decline in 2025. Profitability has also weakened materially in 2025 versus prior years, with net profit margin dropping sharply and operating margins compressing versus the strong 2021–2024 period. A key positive is that gross margin has remained relatively stable in the high-30% range, suggesting the core service economics are intact, but the recent step-down in earnings power is a clear near-term concern.56
Neutral
Balance Sheet
Leverage increased meaningfully in 2025, with debt rising and the debt-to-equity ratio moving to a more aggressive level versus 2023–2024 (when leverage was much lower). Equity has also come down notably from 2021–2024 levels, reducing balance-sheet cushion. Returns on equity remain solid on paper, but the combination of higher leverage and a weaker 2025 earnings profile raises financial risk and reduces flexibility compared with the company’s recent history.48
Neutral
Cash Flow
Cash generation remains a relative strength: operating cash flow and free cash flow stayed positive and sizable across all periods, including 2025. Free cash flow has generally tracked net income reasonably well (though it dipped in 2025), and the business has shown an ability to convert profits into cash through cycles. The main weakness is volatility in free cash flow growth (notably negative in 2023 and sharply negative in 2025), which points to less consistent cash expansion.67
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 305.63M | 313.86M | 296.59M | 293.74M | 278.81M |
| Gross Profit | 117.17M | 123.24M | 116.38M | 115.58M | 105.66M |
| EBITDA | 28.71M | 48.51M | 52.68M | 58.69M | 50.85M |
| Net Income | 12.94M | 29.63M | 34.15M | 40.80M | 41.55M |
Balance Sheet | |||||
| Total Assets | 204.64M | 191.88M | 181.43M | 184.99M | 207.54M |
| Cash, Cash Equivalents and Short-Term Investments | 18.20M | 16.37M | 20.96M | 30.25M | 45.79M |
| Total Debt | 79.52M | 15.68M | 34.42M | 61.11M | 3.77M |
| Total Liabilities | 136.54M | 76.30M | 91.35M | 126.72M | 63.69M |
| Stockholders Equity | 68.10M | 115.57M | 90.08M | 58.28M | 143.85M |
Cash Flow | |||||
| Free Cash Flow | 32.44M | 43.65M | 33.30M | 54.25M | 43.11M |
| Operating Cash Flow | 40.30M | 47.73M | 37.40M | 58.90M | 46.35M |
| Investing Cash Flow | -8.63M | -10.62M | -4.10M | -4.66M | -3.24M |
| Financing Cash Flow | -29.77M | -41.66M | -42.56M | -69.74M | -46.74M |
The Hackett Group Technical Analysis
Negative
14.09
Price Trends
17.67
Negative
18.18
Negative
20.26
Negative
Market Momentum
-1.21
Negative
35.95
Neutral
42.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HCKT, the sentiment is Negative. The current price of 14.09 is below the 20-day moving average (MA) of 14.56, below the 50-day MA of 17.67, and below the 200-day MA of 20.26, indicating a bearish trend. The MACD of -1.21 indicates Negative momentum. The RSI at 35.95 is Neutral, neither overbought nor oversold. The STOCH value of 42.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HCKT.
The Hackett Group Risk Analysis
The Hackett Group disclosed 22 risk factors in its most recent earnings report. The Hackett Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
The Hackett Group Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $389.30M | 10.52 | 33.65% | ― | 12.86% | 54.95% | |
69 Neutral | $232.24M | 23.96 | 10.22% | 3.03% | -5.74% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
52 Neutral | $352.28M | 42.13 | 10.27% | 2.41% | 0.68% | -67.84% | |
45 Neutral | $171.86M | 2.63 | ― | ― | -4.93% | 18.65% | |
44 Neutral | $219.69M | -1.68 | -18.81% | ― | -12.45% | -142.77% |
* Technology Sector Average
HCKT
The Hackett Group
14.09
-14.83
-51.28%
III
Information Services Group
4.85
1.98
69.11%
UIS
Unisys
2.41
-1.87
-43.69%
CNDT
Conduent
1.42
-1.92
-57.49%
IBEX
IBEX
29.04
4.26
17.19%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.