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CRA International (CRAI) Remains Poised for Holistic Growth

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On Dec 27, Zacks Investment Research updated the research report on leading consulting service firm CRA International Inc.CRAI .

CRA International is currently focusing on generating balanced and profitable growth across the organization through organic and inorganic means, strengthening client relationships and simplifying internal processes. The company's senior consultants are highly educated, holding advanced degrees. They are recognized experts in their respective fields and help the clients solve complex problems.

At the same time, the company is quite active with its restructuring efforts. It remains on track to curtail expenses by eliminating excess office space, better rationalizing the remaining office space and lowering administrative spending, particularly related to outside contractors and professional fees. CRA International further aims to achieve profitable growth organically in the coming quarters through new engagements and several cross-selling opportunities. The improved cost structure and broad-based profitable growth are expected to translate into attractive margins. The company has also outperformed the Zacks categorized Consulting Services industry in the last three months with an average return of 32.1% compared with 2.7% for the latter.

Furthermore, CRA International's healthy financial position gives it the flexibility to pursue new hires and acquisitions that support the core offerings in its portfolio. The company attempts to generate a high level of repeat business from its existing relationships based on its solid reputation and quality of work. Moreover, CRA International views employees and clients as two main pillars of expansion. It continues to invest in business developments, client-facing activities and recruiting senior-level consultants.

However, customer growth has slowed down significantly as the potential customers are less willing to add consulting services when budgets are tight. The market for economic, litigation support and management consulting services is intensely competitive and highly fragmented. Moreover, as entry into this market is relatively easy, the company faces intense competitive pressure from new entrants. These undermine its growth potential to some extent.

Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the industry include FactSet Research Systems Inc. FDS , Gartner, Inc. IT and The Hackett Group, Inc. HCKT , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

FactSet Research has a long-term earnings growth expectation of 10.7%. It has beaten estimates thrice in the trailing four quarters for an average earnings surprise of 1.9%.

Gartner has long-term earnings growth expectation of 17.3%. It has beaten estimates in each of the trailing four quarters with an average positive earnings surprise of 14.5%.

Hackett has long-term earnings growth expectation of 17.3% and is currently trading at a P/E (F1) of 22.7x.

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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.


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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