CRA International, Inc. (CRAI Quick QuoteCRAI - Free Report) , or Charles River Associates, has had an impressive run over the past month. The stock has gained 16% compared to the 6.4% decline of its industry.

The company’s 2025 and 2026 earnings are expected to increase 5% and 6.4%, respectively, year over year.

CRAI’s Tailwinds

CRAI, as a relatively small player in the consulting and research services sector, presents a compelling narrative when evaluating its market position and growth potential. The company has carved out a niche with its strong reputation for delivering high-quality analytical and strategic consulting services across diverse industries. Despite its size, CRAI benefits from the growing demand for specialized advisory services in an increasingly complex global marketplace.

The company’s ability to attract top talent and focus on innovation and client-centered solutions positions it for significant growth. As industries grapple with rapid technological advancements, regulatory complexities, and evolving market dynamics, CRAI's expertise could see rising demand, allowing it to capture a larger share of its addressable market. Additionally, its proven track record of delivering value to clients may help it sustain long-term partnerships, further bolstering its growth trajectory.

Given the nature of the business, CRAI’s success depends on the talent that it can acquire and retain. The company has built and sustained a strong reputation for delivering high-quality consulting services driven by its highly qualified professionals. Around 74% of its senior staff hold advanced degrees, including doctorates, and are recognized field leaders. At the end of 2024, CRAI had 946 consulting staff, comprising 151 officers, 552 other senior staff and 243 junior staff.

Charles River returns value to shareholders through dividends and share repurchases. Over the years, the company has steadily increased its dividend payouts, paying $9.6 million in 2022, $10.8 million in 2023 and $12.3 million in 2024. Dividend per share has grown alongside, rising from $1.24 in 2022 to $1.44 in 2023 and 1.75 in 2024, reflecting a consistent commitment to enhancing shareholder returns.

Share repurchase activity has varied, with $27.6 million repurchased in 2022, $31.4 million in 2023 and $33.3 million in 2024. This consistency has persisted despite fluctuations in the company’s cash position, underscoring its dedication to creating long-term value for investors and its confidence in the business’s long-term prospects.

Some Risk

Higher talent costs due to a competitive talent market are hurting consulting services companies like Charles River. The industry is labor-intensive and heavily dependent on foreign talent. Moreover, while advancements in automation and AI offer massive opportunities to the industry, these technologies enable clients to integrate new methods and techniques, potentially reducing their dependence on consulting services firms.

CRAI's current ratio of 1.03 is lower than the industry average of 1.19. Additionally, the current ratio has been on a downward trend, dropping from 1.16 a year ago. While a current ratio above 1 generally suggests the company can cover its short-term obligations, the declining trend raises concerns about its ability to maintain sufficient liquidity in the future.

Zacks Rank and Stocks to Consider

Charles River currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader Zacks Business Services sector are Cintas (CTAS Quick QuoteCTAS - Free Report) and Duolingo (DUOL Quick QuoteDUOL - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cintas has a long-term earnings growth expectation of 13.2%. CTAS delivered a trailing four-quarter earnings surprise of 7.6%, on average. 

Duolingo has a long-term earnings growth expectation of 44.9%. DUOL delivered a trailing four-quarter earnings surprise of 22.8%, on average.