CRA International (CRAI) Margin Expansion Reinforces Bullish Narratives on Profit Quality and Valuation

CRA International (CRAI) delivered net profit margins of 7.7% this quarter, edging up from 6.4% a year ago. Earnings increased 31.4% over the past year, well above its 5-year average growth of 11.3% per year. The company now forecasts annual earnings growth of 4.9% and expects revenue to rise by 3.6% per year, highlighting continued momentum. Supported by high quality earnings, accelerating profit margins, and positive growth expectations, CRA International’s latest results have set a positive tone for investors.

See our full analysis for CRA International.

Next, we will put these headline results in context by setting them against the main narratives shaping market sentiment around CRA International. Let’s see where the figures confirm the story and where they might prompt a reassessment.

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Premium Pricing Power Shows in Margin Expansion

• Net profit margins for CRA International rose to 7.7%, up from 6.4% last year, showing the company’s ability to pass through higher fees and sustain profitability as it grows specialized advisory work.
• Analysts' consensus view points to strong demand for CRA’s high-value services, as recent price increases signal clients are willing to pay a premium for expert guidance in complex regulatory and M&A environments.
  • Record performance in Antitrust & Competition Economics is highlighted as a key reason margins have improved.
  • Further margin expansion is expected to be supported by targeted investments in talent and technology, which help capture higher-value assignments even as regulatory complexity intensifies.

Buyback Pace and Lower Shares Outstanding Support EPS

• CRA International is reducing its number of shares outstanding by an estimated 2.89% per year for the next three years, largely thanks to buybacks totaling around $43 million in the recent quarter.
• According to the consensus narrative, this steady buyback activity provides a tailwind to future earnings per share (EPS) growth, even if overall profit growth moderates.
  • Analysts forecast that by 2028, EPS could reach $9.06, up from $56.4 million in total earnings today, partly driven by the decline in share count.
  • Such capital deployment is seen as positive, but analysts note the need to monitor the company’s $100.6 million net debt to ensure financial flexibility isn’t compromised in an uncertain macro backdrop.

Valuation Discount Versus Peers and DCF Fair Value

• With a price-to-earnings ratio of 22.2x, CRA International is trading well below its US professional services industry average (25.9x) and direct peers (37.9x). Its $190.49 share price sits at a sizable discount to both the DCF fair value of $306.78 and the sector analyst target of $247.50.
• Analysts' consensus narrative frames this discount as an opportunity, noting the company’s improved profitability metrics and stable revenue growth rates as support for a potential upside re-rating.
  • Consensus expectations hinge on investors believing the company will deliver $822.0 million in revenue and $60.0 million in earnings by 2028, which would justify a higher future PE multiple and close the gap to fair value.
  • The current discounted valuation is interpreted as pricing in risk but offering upside if margin and growth forecasts materialize as expected.

If the latest numbers have you reconsidering CRA International's long-term investment case, see how the full Consensus Narrative stacks up against analyst assumptions. 📊 Read the full CRA International Consensus Narrative.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for CRA International on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your CRA International research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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While CRA International’s solid margins and growth are offset by concerns about rising net debt, this could impact its financial flexibility if conditions worsen.

If you prefer companies with stronger balance sheets and less financial risk, use our solid balance sheet and fundamentals stocks screener (1984 results) to focus your search on businesses built for resilience.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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