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Tale of the Tape

Zacks Equity Research

Looking for a Top Value Stock? 3 Reasons Why CRA International (CRAI) is an Excellent Choice
November 17, 2016

CRAI

Trades from $3

Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score systemwe have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.

This method discovered several great candidates for value-oriented investors, but today let’s focus on CRA International Inc. (CRAI - Free Report) as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for CRAI’s status as a solid value stock below:

Price to Forward Sales for CRA International

One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.

With a P/S ratio of 0.8, CRAI investors are paying 80 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 1.33, and it is safe to say that CRAI is undervalued compared to many of its peers on this important metric.

CRA INTL INC PS Ratio (TTM)

 

CRA INTL INC PS Ratio (TTM) | CRA INTL INC Quote

Price/Cash Flow for CRA International Stock

An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This reading is preferred by some since it avoids amortization and depreciation concerns and can give a more accurate picture of the financial health in a business.

The P/CF ratio for CRAI comes in at 9.19, and since investors are generally looking for a reading under 20 here, this is pretty good news. Meanwhile, we should also point out that the industry average for this metric is 11.04, so CRA International has its peers beat in this regard too.

CRAI Earnings Estimate Revisions Moving in the Right Direction

The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow CRAI stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for CRA International now.

Over the past 30 days, 1 earnings estimate has gone higher compared to none lower for the full year, while we are also seeing that 1 estimate has move upwards with no downward revision for the next year time frame too.  These revisions have helped to boost the consensus estimate as 30 days ago CRAI was expected to post earnings of $1.23 per share for the full year though today it looks to have EPS of $1.30 for the full year. 

Bottom Line

For the reasons detailed above, investors shouldn’t be surprised to read that we have CRAI as a stock with a Value Score of ‘A’ and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

So if you are a value investor, definitely keep CRAI on your short list as this looks to be a stock that is very well-positioned for gains in the near term. 

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