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CRA (CRAI) Down 10.4% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for CRA International (CRAI). Shares have lost about 10.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is CRA 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 drivers.

Charles River Associates Lags Q1 Earnings Estimates

Charles River Associates 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.

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.

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%.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, CRA has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

CRA has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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