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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of CRA International, Inc. (NASDAQ:CRAI), it is a financially-robust company with a strong track record of performance, trading at a great value. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on CRA International here.
Undervalued with excellent balance sheet
In the past couple of years, CRAI has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. Not only did CRAI outperformed its past performance, its growth also exceeded the Professional Services industry expansion, which generated a 25% earnings growth. This is an optimistic signal for the future. CRAI is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that CRAI has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. CRAI seems to have put its debt to good use, generating operating cash levels of 0.52x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
CRAI is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of CRAI's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the professional services industry, CRAI is also trading below its peers, relative to earnings generated. This supports the theory that CRAI is potentially underpriced.
For CRA International, I've put together three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for CRAI’s future growth? Take a look at our free research report of analyst consensus for CRAI’s outlook.
- Dividend Income vs Capital Gains: Does CRAI return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from CRAI as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CRAI? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.