A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.
Here we focus on CRA International, Inc. CRAI, a stock that has rallied a massive 64.1% in the past year, significantly outperforming the industry’s gain of 26%.
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We believe the stock has the potential to continue the bull run. The reasons behind our optimism include the company’s strong global presence, prudent business diversification and shareholder-friendly moves.
Strong Global Presence
CRA International operates through a global network of coordinated offices spread across North America and Europe. The company’s international presence provides it the opportunity to work with world’s leading professionals on multiple issues. This helps the company enhance its knowledge base and areas of functional expertise. The majority of the company’s clients are multinational firms facing complicated issues.
We also believe CRA International’s international operations help expand its geographic footprint and contribute to top-line growth. In fiscal 2017, 2016 and 2015, the company earned 20%, 22% and 20% of its total revenues, respectively, from its international business.
Diversified Business
CRA International has a diversified business with service offerings across areas of functional expertise, client base and geographical regions. Being proficient and excellent in multiple industries helps the company meet varying client needs and offer other innovative services. Further, the company gets to know about business strategies adopted across the world. This multidisciplinary set up enables the company bring experts from all fields under one platform. The diversification in business helps reduce CRA International’s dependence on any specific market, industry or geographic area. It also increases the company’s ability to adapt to any changing conditions.
Well-Equipped Professional Team
CRA International is well-known for its global consulting services focused on areas of economic, financial and management consulting. We believe itsexcellent professional team has helped it maintain its solid reputationfor its high-quality consulting services. Almost three fourths of the company’s senior consultants are highly educated, having doctorate or other advanced degrees and are recognized experts in their respective fields. As of Dec 30, 2017, its team comprised 631 consultants, including 476 senior staff and 155 junior staff.
Additionally, the company works with a select group of non-employee experts belonging to top educational institutes to better serve clients. These experts also generate business for the company and provide access to other leading academic and industry experts. The key areas of focus for the company are generating balanced and profitable growth across the organization through optimum organic and inorganic means, strengthening client relationships within two lines of business and simplifying internal processes. These activities augur well for the long-term growth of the company.
Shareholder-Friendly Moves
We are impressed with CRA International’s consistent record of returning value to shareholders in the form of dividend and share repurchases. In fiscal 2017, CRA International returned $24.6 million to its shareholders, which included $5.1 million of dividend payments and $19.5 million of share repurchases. In fiscal 2016, the company returned $20.3 million to its shareholders, inclusive of $1.2 million of dividend payments and $19.1 million through share buybacks.
During first-quarter 2018, CRA International returned $9.8 million to its shareholders, which includes $1.5 million of dividend payments and $8.3 million through share repurchases. Additionally, on Apr 26, 2018, the company’s board of directors announced a quarterly cash dividend of 17 cents per share, payable on Jun 15, 2018 to shareholders of record as of May 29, 2018.
Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business.
Bottom Line
The aforementioned factors positively impacted CRA International’s performance in the last reported quarter. In fact, the company outperformed the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive surprise of 36.2%. We believe the upbeat performance will continue in the quarters ahead, thus giving investors enough reasons to remain optimistic on the stock.
Zacks Rank & Stocks to Consider
Currently, CRA International has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Business Services sector include Accenture plc ACN, NV5 Global NVEE and Bureau Veritas S. A. BVRDF. All the stocks carry a Zacks Rank #2 (Buy).
The long-term expected earnings per share growth rates for Accenture, NV5 Global and Bureau Veritas are 10%, 20% and 8%, respectively.
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