Charles River Associates CRAI shares have jumped 20.7% against the 9.4% decline of its industry and outperformed the 10% rise of the Zacks S&P 500 Composite.

CRAI reported impressive fourth-quarter 2024 results. Quarterly adjusted EPS came in at $2.03, which surpassed the Zacks Consensus Estimate by 27.7% and increased 24.5% year over year. Revenues of $176.4 million beat the consensus mark by 6.1% and rose more than 9.2% from the year-ago quarter.

How is CRAI Doing?

The growing demand for specialized advisory services in an increasingly complex global marketplace benefits Charles River Associates. The company’s ability to attract top talent and its inclination toward innovation and client-centric solutions positions it for significant growth.

As industries navigate rapid technological advancements, regulatory complexities and evolving market dynamics, CRAI's expertise could witness rising demand, enabling it to capture a larger market share. Its proven record of delivering value to clients may help it sustain long-term partnerships, bolstering its growth trajectory.

CRAI’s focus on strengthening client relationships across its two primary business lines allows it to retain customers efficiently. This strategic approach not only deepens trust and loyalty but also improves the company’s brand image as a reliable partner in the consulting industry. CRAI delivers consistent value to its clients by streamlining internal operations to boost efficiency.

The company’s geographic presence across North America and Europe plays a pivotal role in its ability to serve a diverse client base, catering to varied industrial and regional demands. This reach also fosters collaboration with leading professionals globally, solidifying its expertise and appeal.

Over the years, the company has steadily increased its dividend payouts, paying $9.6 million in 2022, $10.8 million in 2023 and $12.3 million in 2024. The dividend per share has grown from $1.24 in 2022 to $1.44 in 2023 and 1.75 in 2024, reflecting a consistent commitment to enhancing shareholder returns. Consistent dividend payment is a green flag for dividend-seeking investors.

Share repurchase activity has varied, with $27.6 million repurchased in 2022, $31.4 million in 2023 and $33.3 million in 2024. This consistency has persisted despite fluctuations in the company’s cash position, demonstrating its dedication to creating long-term value for investors and its confidence in the business’s long-term prospects.

Meanwhile, the company is perturbed by higher talent costs due to a competitive talent market. The industry is labor-intensive and heavily dependent on foreign talent. Moreover, advancements in automation and AI enable clients to integrate new methods and techniques, lowering their dependence on consulting services firms.

CRAI's liquidity position is weakened by its significant short-term debt relative to its cash reserves. As of Sept. 30, 2024, the company holds $60 million in short-term debt but only $24 million in cash and cash equivalents. This imbalance results in a current ratio of 1.07, which is lower than the industry average of 1.19.

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Additionally, the metric has declined from 1.11 in the year-ago quarter. While a current ratio above 1 generally suggests that the company can cover its short-term obligations, the declining trend does not bode well, as it points to the company’s ability to maintain sufficient liquidity in the future.

CRAI’s Zacks Rank & Stocks to Consider

Charles River Associates has a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the broader Zacks Business Services sector are Qifu Technology, Inc. QFIN and UiPath PATH, each flaunting a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Qifu Technology has a long-term earnings growth expectation of 11.3%. QFIN delivered a trailing four-quarter earnings surprise of 14.5%, on average.

UiPath has a long-term earnings growth expectation of 19%. PATH delivered a trailing four-quarter earnings surprise of 36.4%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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