Reasons to Retain Charles River Stock in Your Portfolio for Now

CRA International, Inc. CRAI, or Charles River Associates, has had an impressive run over the past month. Its shares have rallied 19.3%, outperforming the 25.1% decline of the industry it belongs to and the 15.6% growth of the Zacks S&P 500 composite. Image Source: Zacks Investment ResearchThe company’s 2025 and 2026 earnings are expected to increase 5.26% and 7.66%, respectively, year over year.Factors That Augur Well for CRAICRAI's robust performance in the second quarter is boosting the company's prospects, highlighted by a 9.0% year-over-year revenue increase to $186.9 million and an impressive 85.4% rise in GAAP net income to $12.1 million, reflecting enhanced profitability and effective cost management. The company maintained stable operations despite a 3.2% decline in headcount, underscoring strong productivity and operational efficiency with a utilization rate of 76%. These strong results position CRAI well for sustained growth and future margin optimization.The increasing complexity of the global business landscape, driven by technological disruption, regulatory changes and shifting market dynamics, aligns well with CRAI’s core capabilities. With a strong focus on innovation and a proven ability to attract top-tier talent, CRAI is well-positioned to address the growing demand for expert advisory services. In addition, its client-focused approach and track record of delivering measurable value provide a strong foundation for long-term client relationships, which are essential for sustained and stable growth.Charles River’s shareholder-friendly initiatives demonstrate a disciplined capital allocation strategy. The steady increase in both dividend payouts and dividend per share, from $9.6 million in 2022 to $10.8 million in 2023 and further to $12.3 million in 2024, is encouraging. Correspondingly, dividend per share increased from $1.24 in 2022 to $1.44 in 2023 and to $1.75 in 2024, signaling strong earnings growth and a commitment to rewarding shareholders.Moreover, the company’s ongoing share repurchase activity, rising from $27.6 million in 2022 to $33.3 million in 2024, further illustrates its focus on enhancing shareholder value. While many companies scale back buybacks during periods of cash flow uncertainty, Charles River’s willingness to continue repurchases despite fluctuations in its cash position speaks to its confidence in the underlying strength of its business and its belief that the stock remains a worthwhile investment. In the second quarter of 2025, the company returned $46.6 million of capital to its shareholders, consisting of $3.4 million of dividend payments and $43.2 million for share repurchases of approximately 231,000 shares.CRAI: Key Risks to WatchCharles River Associates is facing mounting pressure from increased expenses and weak liquidity. Rising talent costs in a competitive labor market pose a significant challenge for this labor-intensive industry, which also relies heavily on foreign expertise. Meanwhile, advancements in AI and automation are enabling clients to internalize capabilities, potentially reducing their reliance on consulting firms like CRAI.Adding to these challenges, CRAI’s current ratio has declined from 1.16 to 1.03 over the past year, falling below the industry average of 1.19. Although the ratio remains above 1, the downward trend raises concerns about the company’s ability to sustain adequate short-term liquidity going forward. In the second quarter of 2025, the ratio further went down to 0.92.CRAI’s Zacks Rank and Stocks to ConsiderCharles River currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks from the broader Zacks Business Services sector are Maximus MMS and AppLovin APP.Maximus sports a Zacks Rank of #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.MMS has an encouraging earnings surprise history, having outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missing once. The average beat is 29.3%. AppLovin also sports a Zacks Rank of 1.APP has an encouraging earnings surprise history, outpacing the Zacks Consensus estimate in each of the trailing four quarters. The average beat is 22.36%.One Big Gain, Every Trading DayTo help you take full advantage of this market, you’re invited to access every stock recommendation in all our private portfolios - for just $1.Zacks private portfolio services that closed 256 double and triple-digit winners in 2024 alone. That’s about one big gain every day the market was open. Of course, not all our picks are winners, but members have seen recent gains as high as +627% +1,340%, and +1,708%.Imagine how much you could profit with a steady stream of real-time picks from all our services that cover a number of strategies to suit a variety of investing and trading styles.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Charles River Associates (CRAI): Free Stock Analysis Report Maximus, Inc. (MMS): Free Stock Analysis Report AppLovin Corporation (APP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks