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Charles River Associates (CRAI) Lags Q1 Earnings Estimates

Zacks Equity Research

Charles River Associates CRAI delivered disappointing first-quarter 2019 results, with earnings and revenues missing the Zacks Consensus Estimate.

Non-GAAP earnings of 54 cents per share lagged the consensus mark by 7 cents and decreased 11.5% year over year. Revenues came in at $105.8 million, which missed the consensus mark by roughly $2 million but increased 6.4% year over year.

Shares of Charles River have declined 4.1% over the past three months against the 10.8% rally of the industry it belongs to.

Other Quarterly Details

The company delivered 75% utilization and headcount was up 6.2%, translating into 7.9% year-over-year revenue growth on a constant-currency basis.

Geographically, revenues from North American and European operations grew 6% and 7.9% year over year, respectively.

Charles River Associates Revenue (TTM)

Charles River Associates Revenue (TTM)

Charles River Associates revenue-ttm | Charles River Associates Quote

In the reported quarter, non-GAAP EBITDA decreased 1.2% year over year to $8.5 million. Non-GAAP EBITDA margin declined 70 basis points (bps) year over year to 8%.

The company exited the first quarter with cash and cash equivalents of 15 million compared with $38 million at the end of the prior quarter. It used $56.6 million of cash in operating activities and capex was 0.8 million.

Dividend and Share Repurchase

In the quarter, Charles River returned $6 million of capital to shareholders, including $4.3 million for repurchases of roughly 87,000 shares and $1.7 million of dividend payments.

Concurrent with the earnings release, the company announced a quarterly cash dividend of 20 cents per share, payable on Jun 14, 2019 to shareholders of record as of May 28, 2019.

2019 Guidance

Management reiterated 2019 guidance. On a constant-currency basis relative to fiscal 2018, revenues are expected in the range of $430-$445 million and non-GAAP EBITDA margin is projected in the range of 9.2-10.2%. The Zacks Consensus Estimate for 2019 revenues is pegged at $435 million.

Zacks Rank & Key Picks

Charles River currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Zacks Business Services sector are WEX WEX, Automatic Data Processing ADP and FLEETCOR FLT. While WEX sports a Zacks Rank #1 (Strong Buy), Automatic Data Processing and FLEETCOR carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected EPS (three to five years) growth rate for WEX, Automatic Data Processing and FLEETCOR is 15%, 13% and 16.5%, respectively.

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