Low Debt Helps Charles River (CRAI) Amid High Cost of Talent


Charles River CRAI is currently building on its strong balance sheet and on actions to increase shareholder value.

Charles River Associates posted mixed results in the third quarter of 2021, with earnings exceeding Zacks’ consensus estimate and revenue missing the same. Quarterly non-GAAP EPS stood at $ 1.44, which is 34.6% higher than Zacks’ consensus estimate and increased 89.5% year over year. Revenue of $ 136.4 million exceeded the consensus mark of 1.2%, but increased 12% year-over-year.

The stock has jumped 123.8% in the past year against a rally of 58.5% in the industry it belongs to.

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How is Charles River doing?

Charles River’s total debt-to-total capital ratio was 0.03 at the end of the third quarter of 2021, up from 0.19 at the end of the previous quarter. A declining debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is decreasing, as is the risk of insolvency. The cash and cash equivalents balance of $ 20 million at the end of the quarter was well above its current debt level of $ 6 million.

We are impressed with Charles River’s consistent track record of delivering value to shareholders in the form of dividends and share buybacks. In 2020, 2019 and 2018, the company repurchased shares worth $ 13.4 million, $ 18.1 million and $ 27.9 million, respectively. It paid out $ 7.39 million, $ 6.54 million and $ 5.78 million in dividends in 2020, 2019 and 2018, respectively. Such actions bear witness to the company’s commitment to creating value for its shareholders and underline its confidence in its company. These initiatives not only inspire investor confidence, but also have a positive impact on earnings per share.

The higher costs of talent due to a competitive talent market are hurting consulting companies like Charles River. The industry is labor intensive and heavily dependent on foreign talent. As advances in automation and AI present a huge opportunity for the industry, these technologies allow customers to understand and integrate new methods to improve performance, creating uncertainty for service companies. of advice.

Charles River wears a Zacks Rank # 2 (Buy). You can see The full list of today’s Zacks # 1 (strong buy) stocks here.

Actions to consider

Some top-ranked stocks in Zacks’ broader commercial services sector are Avis Budget CAR, Cross Country Healthcare, Inc. CCRN and FactSet Research Systems Inc. SDS.

Budget Notice has an expected earnings growth rate of approximately 398.1% for the current year. CAR has a surprise profit over the last four quarters of 76.9%, on average.

Avis Budget shares have jumped 702% so far this year. CAR shows long-term earnings growth of 27.5%. CAR has a Zacks # 1 rank.

Cross Country Health Care has an expected earnings growth rate of approximately 397.8% for the current fiscal year. CCRN has a surprise revenue of the last four quarters of 75%, on average.

Shares of Cross Country Healthcare have jumped 199.7% so far this year. CCRN shows long-term earnings growth of 12%. CCRN has a Zacks # 1 rank.

FactSet Search has an expected earnings growth rate of approximately 9% for the current year. FactSet has a surprise profit for the last four quarters of 2.4% on average.

FactSet shares have jumped 45.3% so far this year. FDS shows long-term earnings growth of 8.5%. FDS has a Zacks # 2 (Buy) rank.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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