3 Reasons ICFI is Risky and 1 Stock to Buy Instead

ICF International has gotten torched over the last six months - since January 2025, its stock price has dropped 25.4% to $88.62 per share. This may have investors wondering how to approach the situation.

Is now the time to buy ICF International, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Do We Think ICF International Will Underperform?

Even with the cheaper entry price, we're sitting this one out for now. Here are three reasons why you should be careful with ICFI and a stock we'd rather own.

1. Weak Backlog Growth Points to Soft Demand

In addition to reported revenue, backlog is a useful data point for analyzing Government & Technical Consulting companies. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into ICF International’s future revenue streams.

ICF International’s backlog came in at $3.4 million in the latest quarter, and over the last two years, its year-on-year growth averaged 1.6%. This performance was underwhelming and suggests that increasing competition is causing challenges in winning new orders.

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect ICF International’s revenue to drop by 6%, a decrease from its 6.1% annualized growth for the past five years. This projection is underwhelming and suggests its products and services will face some demand challenges.

3. Free Cash Flow Margin Dropping

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, ICF International’s margin dropped by 5.2 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. ICF International’s free cash flow margin for the trailing 12 months was 6.4%.

Final Judgment

ICF International falls short of our quality standards. Following the recent decline, the stock trades at 12.8× forward P/E (or $88.62 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere. We’d recommend looking at our favorite semiconductor picks and shovels play.

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