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CRA International (CRAI) Down 3.5% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for CRA International,Inc. (CRAI - Free Report) . Shares have lost about 3.5% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is CRAI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

CRA International Beats on Q1 Earnings, Retains View

CRA International reported strong first-quarter 2018 results with revenues and earnings surpassing the Zacks Consensus Estimate.

The company’s first-quarter 2018 earnings (excluding 5 cents from non-recurring items) came in at 72 cents per share compared with 33 cents in the year-earlier quarter. The bottom line comfortably surpassed the Zacks Consensus Estimate of 50 cents.

Total first-quarter 2018 revenues of $99.5 million beat the Zacks Consensus Estimate of $95.7 million. The figure was up 12.8% year over year. The top line benefited from broad-based revenue growth in its Energy, Forensic Services, Life Sciences and Marakon Practices and strong contributions by its Antitrust & Competition Economics practice. Strength across North American and international operations was also witnessed with revenues increasing 9.1% and 30.7% year over year, respectively.

Margins

Non-GAAP adjusted EBITDA was $9.9 million in first-quarter 2018 compared with $6.7 million in the year-ago quarter. Non-GAAP adjusted EBITDA margin was 10% for the reported quarter compared with 7.6% in the year-ago quarter.

Balance Sheet and Cash Flow

CRA International exited first-quarter 2018 with cash and cash equivalents of $10.9 million compared with $21.8 million in the year-ago quarter. As of Mar 31, 2018, long-term liabilities were $34.5 million compared with $32.5million at the end of 2017.

The company used $40.5 million of cash in operating activities in the reported quarter compared with $20.4 million in the year-ago quarter.

During the reported quarter, CRA International returned $9.8 million to its shareholders, which includes $1.5 million of dividend payments and $8.3 million through share repurchases. The company repurchased almost 163,000 shares at an aggregate cost of $8.3 million and an average price of $51.13 per share.

Additionally, the company’s board of directors also announced a quarterly cash dividend of 17 cents per share, payable on Jun 15, 2018 to shareholders of record as of May 29, 2018.

2018 Outlook

CRA International reaffirmed its guidance for 2018. The company expects revenues to be in the range of $380-$392 million and non-GAAP EBITDA margin to be in the range of 8.8-9.8%. Further, the company expects non-GAAP effective tax rate to be between 28% and 30% for 2018.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

VGM Scores

At this time, CRAI has a subpar Growth Score of D. Its Momentum is doing a bit better with a C. The stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Notably, CRAI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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