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Here's Why Charles River Associates Stock is a Great Pick

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Charles River Associates (CRAI - Free Report) has performed extremely well over the past year and has the potential to sustain momentum in the near term. Consequently, you should add the stock to your portfolio if you have not taken advantage of the share price appreciation yet.

What Makes CRAI an Attractive Pick

An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run over the year. Shares of CRAI have surged 85% compared with the industry and the Zacks S&P 500 composite’s growth of 12% and 29%, respectively.

Solid Rank: CRAI carries a Zacks Rank #2 (Buy) at present and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition.

Northward Estimate Revisions: Four earnings estimates for 2024 moved north in the past 60 days versus no southward revision, indicating analysts’ confidence in the company. The Zacks Consensus Estimate for 2024 earnings has increased 3.2% at the same time.

Positive Earnings Surprise History: Charles River has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 31%.

Strong Growth Prospects: The Zacks Consensus Estimate for CRAI’s 2024 revenues is pegged at $677.3 million, indicating 8.5% year-over-year growth. The consensus estimate for earnings is pegged at $7.15 per share, implying 31% growth year over year.

Growth Factors: CRAI has built and sustained a strong reputation for delivering high-quality consulting services, driven by its highly qualified professionals. Nearly 75% of its senior consultants hold advanced degrees, including doctorates, and are recognized leaders in their fields. In 2023, CRAI employed 1,004 consulting staff, comprising 156 officers, 527 senior staff, and 321 junior staff.

Additionally, the company collaborates with non-employee experts from top academic institutions, enhancing its ability to address complex client needs. These experts also help generate new business opportunities and connect CRAI to other leading professionals in academia and industry. The company prioritizes strengthening client relationships across its two primary business lines while streamlining internal operations to improve efficiency. This strategic focus supports long-term growth, positioning CRAI as a leader in the consulting industry. As the company continues to execute its growth initiatives, the stock is likely to benefit from improved financial performance and market sentiment.

Charles River commits to returning value to its shareholders through dividends and share repurchases. Over the years, the company has steadily increased its dividend payouts, paying $8.29 million in 2021, $9.58 million in 2022, and $10.8 million in 2023. Share repurchase activity has varied, with $44.9 million repurchased in 2021, $27.6 million in 2022, and $24.8 million in 2023.

Other Stocks to Consider

Some other top-ranked stocks in the broader Zacks Business Services sector are AppLovin (APP - Free Report) and Parsons (PSN - Free Report) .

AppLovin flaunts a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.

APP delivered a trailing four-quarter earnings surprise of 26.2%, on average.

Parsons sports a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 18.6%. PSN delivered a trailing four-quarter earnings surprise of 17.5%, on average.


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