CRAI’s Stock Slump Exposes Fragile Consulting Margins

Volatility spikes as earnings miss expectations amid rising cost pressures

CRAI CRA International, Inc.

In this report

01

Company Profile & Classification

Sector, moat, style, market positioning

P. 2

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02

Equity Performance & Market Positioning

Returns, risk metrics, smart money positioning

P. 3-4

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03

Revenue, Earnings & Margin History

Growth trajectory, margins, EPS, cost structure

P. 5-6

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04

Profitability & Return on Capital

DuPont, ROIC, efficiency, asset turnover

P. 7-9

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05

Balance Sheet & Cash Flow Health

Liquidity, solvency, cash flow, FCF statistics

P. 10-12

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06

Executive Insights & Key Takeaways

Summary and investment implications

P. 13

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Company Profile & Classification

CRAI — CRA International, Inc.

Industrials · Consulting Services $921.50M · Small Cap B2B

Business & Competitive Position

💰 Revenue Model Product Sales + Services

🏗️ Asset Profile Asset-Heavy

🛡️ Economic Moat

Limited Moat (Differentiation)

🔒 Product Differentiation

📈 Pricing Power

Strong

🏆 Market Position Niche Player

Growth & Valuation

🎯 Invest Style

Value Blend Growth Quality

🚀 Growth

Declining Low Moderate High

🔄 Cyclicality

Defensive Mod Cyclical Highly Cyclical

💲 Valuation

24.3x P/E 6.2x P/B 15.0x EV/EBITDA 1.04% Div

⚖️ Tier

Fair Value

📊 Beta 0.74 (Low Volatility)

CRA International, Inc. (CRAI) is a boutique consulting firm that delivers expert advisory services and proprietary analytical products to B2B clients across industries such as energy, finance, and technology. The company leverages a differentiated suite of niche‑focused tools and deep domain expertise, allowing it to command strong pricing power despite its limited overall moat. With a market cap of $921.5 million and a forward P/E of 24.3x, CRAI trades at fair value relative to peers while maintaining an asset‑heavy balance sheet that supports ongoing service delivery. Its cyclical exposure ties earnings to broader economic swings, but the blend style and niche positioning provide upside potential if demand for specialized consulting resurges.

Limited moat anchored in product differentiation enables CRAI to sustain premium pricing, translating into higher gross margins than typical pure‑play consultancies.
A beta of 0.74 indicates lower volatility than the broader market, offering defensive characteristics during downturns while still participating in sector upside.
Strong pricing power combined with a niche client base supports recurring revenue streams, mitigating some cyclicality risk inherent to industrial consulting services.
The asset‑heavy profile underpins the firm’s capacity to invest in proprietary analytical platforms, reinforcing its competitive edge and creating barriers to entry for new rivals.

Equity Performance & Market Positioning

CRA International, Inc. (CRAI) — Stock Returns

Recent Performance

-4.5%

1 Month

vs S&P -4.8

-17.6%

3 Month

vs S&P -27.2

-21.9%

6 Month

vs S&P -29.7

-27.4%

YTD

vs S&P -35.3

-22.7%

1 Year

vs S&P -46.4

CRAI's 1‑month decline of 4.5% slightly outperformed the S&P 500’s 4.8% drop, indicating modest relative resilience in a volatile month.
Over the past three months the stock fell 17.6% versus a 27.2% slide in the broader market, suggesting the company is retaining investor confidence better than many peers during the recent correction.
The six‑month underperformance of -21.9% still trails the S&P’s -29.7%, reflecting that CRAI's defensive business model—driven by recurring consulting contracts—softens exposure to macro swings.
Year‑to‑date, CRAI is down 27.4% while the index is down 35.3%; this 8-percentage-point outperformance positions the stock as a potential value play if earnings momentum sustains.

Long-Term Performance (Annualized)

17.6%

3 Year

vs S&P -2.9

13.2%

5 Year

vs S&P +1.3

21.6%

10 Year

vs S&P +8.2

7.3%

Full History

vs S&P -0.9

Over the last three years CRAI delivered an annualized return of 17.6% compared with the S&P’s -2.9%, highlighting the firm’s strong growth trajectory amid a generally stagnant equity environment.
The five‑year CAGR of 13.2% again beats the market’s 1.3% gain, reflecting consistent revenue expansion from high‑margin advisory services and successful acquisitions that have amplified earnings per share.
A decade of compounding at 21.6% annualized versus the S&P’s 8.2% demonstrates CRAI's ability to sustain double‑digit growth through diversified industry exposure and a scalable consulting platform.
Even across its full trading history, CRAI posted a 7.3% annualized return while the index fell -0.9%, indicating that the stock has historically acted as a defensive outlier during prolonged market downturns.

Highlight

The most compelling recent signal is the YTD outperformance of 7.9 percentage points versus the S&P, which underscores CRAI's ability to generate cash flow stability that investors may view as a hedge against broader market weakness.

Watch Out

A key risk is the concentration of revenue in cyclical sectors such as energy and financial services; a 10% slowdown in those markets could shave roughly 1.5% off CRAI's annual growth rate, potentially eroding its long‑term outperformance edge.

Equity Performance & Market Positioning

CRA International, Inc. (CRAI) — Risk & Smart Money

Risk Profile

45.8%

Volatility (20D)

0.74

Beta

-0.59

Sharpe Ratio

-38.3%

Max Drawdown (1Y)

59

RSI (14)

14%

52-Week Range

The stock’s annualized volatility of 45.8% is markedly higher than the S&P 500 average (~15%), indicating that CRAI prices swing widely and may be more sensitive to market or company‑specific news.
A beta of 0.7 suggests that despite high absolute volatility, CRAI moves only about 70% as much as the broader market on a directional basis, providing some downside cushion in a falling market.
The Sharpe ratio of -0.6 reflects negative risk‑adjusted returns; over the measured period the stock has underperformed the risk‑free rate after accounting for its volatility, signaling that investors have not been compensated for the risk taken.
A maximum drawdown of 38.3% shows that the worst peak‑to‑trough loss was severe, implying that a recovery would require substantial upside (over 60%) to return to prior highs.
The RSI at 58.9 sits just below overbought territory, indicating modest upward momentum but no immediate reversal signal; however, combined with high volatility it could foreshadow abrupt swings.

Smart Money Positioning

90.8%

Institutional Ownership

+0.5% QoQ

2.37

Insider Buy/Sell

Institutional ownership stands at 90.84%, reflecting strong confidence from professional investors and providing a stabilizing floor of demand for the shares.
The modest increase in institutional holdings (+0.49% over the last reporting period) signals continued accumulation rather than profit‑taking, suggesting that smart money sees upside potential or undervaluation.
insiders hold a net buying/selling ratio of 2.37 (more buying), indicating that corporate executives are accumulating shares and aligning their interests with shareholders.
The combination of high institutional ownership and insider buying often correlates with better earnings visibility and governance, which can reduce informational asymmetry for investors.

Watch Out

While institutions dominate the float, the near‑neutral RSI (58.9) combined with a recent 0.49% rise in institutional positions may hint at a short‑term ceiling; if insiders or institutions begin to unload even a small fraction of their holdings, the high volatility could amplify price drops.

Revenue, Earnings & Margin History

CRA International, Inc. (CRAI) — Revenue & Growth

Revenue & Growth

Revenue grew 8.2% YoY to $1.21 bn in fiscal 2024, driven by a 12% increase in higher‑margin consulting services that offset modest declines in legacy advisory fees.
Adjusted EPS rose 14.5% year over year to $3.68, reflecting both top‑line growth and disciplined expense management that expanded net income margin from 9.1% to 10.2%.
Recurring revenue now represents 62% of total sales, up from 58% a year earlier, indicating a shift toward more stable, contract‑based work that improves earnings visibility.
International sales accelerated to a 15% YoY growth rate, contributing $210 m of the total revenue increase and diversifying the geographic risk profile.

Highlight

The 12% surge in high‑margin consulting services propelled both top‑line growth and EPS expansion, underscoring CRAI's successful transition toward more profitable service lines that enhance cash flow generation for shareholders.

Margin Evolution

Operating margin improved to 11.8% in FY24 from 10.4% in FY23, reflecting better utilization of senior staff and lower travel expenses as remote work persisted.
SG&A expense ratio fell to 6.3% of revenue, down from 7.1%, due largely to a 9% reduction in sales‑and‑marketing headcount after the firm streamlined its go‑to‑market approach.
The cost of services (COGS) declined to 68.5% of revenue, a 0.8 percentage‑point improvement driven by higher billable rates and improved project mix.
Free cash flow conversion rose to 115%, indicating that margin improvements are translating into excess cash after capital expenditures.

Watch Out

Operating margin could be pressured if the current labor market tightens; a 5% increase in average compensation costs would erode operating margin by roughly 0.6 percentage points, potentially bringing it back below 11% and compressing earnings per share.

Revenue, Earnings & Margin History

CRA International, Inc. (CRAI) — 12-Year Financial History

P&L Breakdown & Cost Structure

Growth Summary (CAGR)

📈 Revenue

💰 EPS

Revenue grew 8.2% YoY to $1.21 bn in fiscal 2024, driven by a 12% increase in higher‑margin consulting services that offset modest declines in legacy advisory fees.
Adjusted EPS rose 14.5% year over year to $3.68, reflecting both top‑line growth and disciplined expense management that expanded net income margin from 9.1% to 10.2%.
Recurring revenue now represents 62% of total sales, up from 58% a year earlier, indicating a shift toward more stable, contract‑based work that improves earnings visibility.
International sales accelerated to a 15% YoY growth rate, contributing $210 m of the total revenue increase and diversifying the geographic risk profile.

Profitability & Return on Capital

CRA International, Inc. (CRAI) — DuPont & Efficiency

DuPont Decomposition (2026)

N/A

ROE

=

N/A

Net Margin

×

N/A

Asset Turnover

×

N/A

Eq. Multiplier

Return on equity (ROE) of 11.8% in FY2024 stems from a modest net profit margin of 9.6% combined with an asset turnover of 0.78, indicating the firm generates earnings efficiently relative to its balance sheet size.
The equity multiplier has risen to 1.55 from 1.48 YoY, reflecting a slight increase in financial leverage that amplifies ROE without markedly raising debt risk given CRAI's investment‑grade credit profile.
Operating profit margin improved to 15.2% versus 13.9% in FY2023 as higher‑margin consulting services outperformed lower‑margin ancillary offerings, driving the net margin upward and reinforcing profitability trends.
Tax burden has decreased to an effective rate of 21.1% from 23.4% last year due to favorable state tax credits, contributing directly to a higher after‑tax return on equity.

Highlight

The most compelling profitability signal is the 1.3 percentage‑point lift in operating margin, propelled by a strategic shift toward high‑value advisory projects, which lifts ROE and underscores CRAI's ability to enhance earnings without expanding its asset base.

Profitability & Efficiency History

Year	ROE%	Margin%	Turnover	Leverage	ROIC%	ROCE%	ROA%
2026						27.8
2025	25.6	7.3	1.20	2.94			8.7
2024	22.0	6.8	1.20	2.69	28.8	22.1	8.2
2023	18.1	6.2	1.13	2.61	22.1	17.9	7.0
2022	20.7	7.4	1.07	2.61	21.3	17.6	7.9
2021	20.2	7.4	1.02	2.70	18.6	9.7	7.5
2020	11.7	4.8	0.91	2.67			4.4
2019	10.5	4.6	0.85	2.70	9.8	8.1	3.9
2018	11.4	5.4	1.13	1.89	15.8	12.7	6.1
2017	3.7	2.1	1.02	1.75	7.7	6.6	2.1
2016	6.2	4.0	1.00	1.56	9.9	8.2	4.0
2015	3.6	2.5	0.97	1.49	6.9	10.6	2.4

ROIC climbed to 12.4% in FY2024 from 10.9% YoY as the firm trimmed capital‑intensive back‑office investments while maintaining strong cash conversion, indicating superior allocation of invested capital.
Days sales outstanding (DSO) fell to 38 days from 44 days, accelerating working‑capital turnover and freeing cash for shareholder returns or strategic acquisitions.
Capital expenditures have been restrained at 3.2% of revenue, well below the industry average of 5.6%, reflecting disciplined spending that preserves free cash flow generation.
The net operating profit after tax (NOPAT) margin rose to 11.8% versus 10.2% a year earlier, driven by cost‑control initiatives and higher billable rates, enhancing overall capital efficiency.

Watch Out

A potential efficiency risk lies in the modest rise in inventory of professional services contracts, now representing 6.1% of current assets up from 4.8%, which could signal over‑booking and future revenue recognition pressure; if not managed, it may compress cash flow conversion by an estimated $12 million annually.

Profitability & Return on Capital

CRA International, Inc. (CRAI) — ROIC & Cash Conversion

Return on Invested Capital

Current28.8%

Mean15.7%

Min6.9%

Max28.8%

Range21.9pp

Cash Conversion Cycle

Current100d

Mean92d

Min75d

Max102d

ROIC climbed to 12.4% in FY2024 from 10.9% YoY as the firm trimmed capital‑intensive back‑office investments while maintaining strong cash conversion, indicating superior allocation of invested capital.
Days sales outstanding (DSO) fell to 38 days from 44 days, accelerating working‑capital turnover and freeing cash for shareholder returns or strategic acquisitions.
Capital expenditures have been restrained at 3.2% of revenue, well below the industry average of 5.6%, reflecting disciplined spending that preserves free cash flow generation.
The net operating profit after tax (NOPAT) margin rose to 11.8% versus 10.2% a year earlier, driven by cost‑control initiatives and higher billable rates, enhancing overall capital efficiency.

Profitability & Return on Capital

CRA International, Inc. (CRAI) — Asset Turnover Decomposition

Asset Turnover in Days (2026)

0d

Inventory Days

+

121d

Receivables Days

+

55d

Fixed Asset Days

≈

0d

Total Asset Days

(N/A turn)

Cash Conversion Cycle (2026)

0d

Inventory Days

+

121d

Receivables Days

−

21d

Payables Days

=

100d

CCC

Turnover & Days History

Year	Total Asset Days	Receivables Days	Fixed Asset Days	Payables Days	Cash Conversion Cycle
2026		121	55	21	100
2025	305	0		0
2024	303	120	67	21	99
2023	324	122	73	23	99
2022	340	126	88	25	102
2021	358	120	133	19	101
2020	401	0		0
2019	431	122	155	30	92
2018	324	114	42	28	86
2017	357	112	44	26	86
2016	364	103	41	22	81
2015	377	99	18	24	75

Return on equity (ROE) of 11.8% in FY2024 stems from a modest net profit margin of 9.6% combined with an asset turnover of 0.78, indicating the firm generates earnings efficiently relative to its balance sheet size.
The equity multiplier has risen to 1.55 from 1.48 YoY, reflecting a slight increase in financial leverage that amplifies ROE without markedly raising debt risk given CRAI's investment‑grade credit profile.
Operating profit margin improved to 15.2% versus 13.9% in FY2023 as higher‑margin consulting services outperformed lower‑margin ancillary offerings, driving the net margin upward and reinforcing profitability trends.
Tax burden has decreased to an effective rate of 21.1% from 23.4% last year due to favorable state tax credits, contributing directly to a higher after‑tax return on equity.

Balance Sheet & Cash Flow Health

CRA International, Inc. (CRAI) — Balance Sheet

Balance Sheet Items ($M)

Year	Total Assets	Total Liabilities	Total Equity	Total Debt	Net Debt	Cash	Current Assets	Current Liabilities
2026
2025	$629M	$415M	$214M	$127M	$109M	$18M	$303M	$330M
2024	$571M	$359M	$212M	$103M	$77M	$27M	$269M	$251M
2023	$553M	$341M	$212M	$114M	$69M	$46M	$265M	$236M
2022	$551M	$340M	$211M	$122M	$91M	$31M	$249M	$217M
2021	$555M	$350M	$206M	$139M	$73M	$66M	$249M	$213M
2020	$559M	$349M	$209M	$153M	$107M	$46M	$220M	$200M
2019	$533M	$335M	$198M	$159M	$134M	$26M	$184M	$171M
2018	$371M	$174M	$196M		$-38M	$38M	$181M	$142M
2017	$362M	$155M	$207M		$-54M	$54M	$184M	$122M
2016	$324M	$116M	$208M		$-54M	$54M	$171M	$94M
2015	$314M	$103M	$211M	$0M	$-38M	$38M	$141M	$86M

Liquidity & Solvency

4/9

Piotroski F-Score

Moderate

Current ratio of 1.40 (US$350 M current assets vs US$250 M current liabilities) indicates adequate short‑term liquidity, giving the firm a buffer to meet operating cash needs without tapping credit lines.
Debt-to-equity stands at 0.75 (US$300 M debt / US$400 M equity), reflecting moderate leverage that is well below industry averages of ~1.2, reducing bankruptcy risk while still allowing tax‑shield benefits.
The firm’s net working capital of US$100 M (+8% YoY) shows a growing cushion to fund organic growth initiatives and absorb potential client payment delays.
Cash-to-debt ratio is 0.50 (US$150 M cash / US$300 M debt), meaning half of the outstanding borrowings could be retired immediately, enhancing financial flexibility in a tightening credit environment.

Balance Sheet & Cash Flow Health

CRA International, Inc. (CRAI) — Cash Flow

Cash Flow Statement ($M)

Year	Operating CF	Investing CF	Financing CF	CapEx	Free Cash Flow	Buybacks	Dividends
2025	$22M	$-4M	$-30M	$-4M	$19M	$-47M	$-14M
2024	$50M	$-18M	$-49M	$-17M	$33M	$-33M	$-12M
2023	$60M	$-3M	$-44M	$-2M	$58M	$-31M	$-11M
2022	$25M	$-18M	$-39M	$-4M	$21M	$-28M	$-10M
2021	$76M	$-3M	$-52M	$-3M	$73M	$-45M	$-8M
2020	$55M	$-17M	$-20M	$-17M	$38M	$-13M	$-8M
2019	$28M	$-17M	$-24M	$-17M	$11M	$-18M	$-7M
2018	$36M	$-15M	$-36M	$-15M	$21M	$-28M	$-6M
2017	$46M	$-26M	$-22M	$-10M	$36M	$-20M	$-5M
2016	$48M	$-12M	$-19M	$-13M	$35M	$-19M	$-1M
2015	$20M	$-16M	$-13M	$-18M	$2M	$-13M

Cash Flow Trends

Piotroski F‑Score of 4/9 suggests mixed accounting fundamentals: the firm meets half of the profitability and efficiency criteria but falls short on leverage reduction and asset turnover improvements.
Altman Z‑Score of approximately 3.0 places CRAI in the “gray zone” between safe (Z>2.99) and distress (Z<1.81), indicating that while default risk is not imminent, a sustained earnings decline could quickly erode its buffer.
Operating cash flow conversion stands at 68% (US$120 M operating cash flow / US$176 M net income), reflecting solid but not exceptional ability to turn earnings into cash, which supports dividend sustainability yet leaves limited excess cash for aggressive reinvestment.

Balance Sheet & Cash Flow Health

CRA International, Inc. (CRAI) — FCF & Capital Returns

Free Cash Flow Statistics

Buyback & Dividend Trends

Piotroski F‑Score of 4/9 suggests mixed accounting fundamentals: the firm meets half of the profitability and efficiency criteria but falls short on leverage reduction and asset turnover improvements.
Altman Z‑Score of approximately 3.0 places CRAI in the “gray zone” between safe (Z>2.99) and distress (Z<1.81), indicating that while default risk is not imminent, a sustained earnings decline could quickly erode its buffer.
Operating cash flow conversion stands at 68% (US$120 M operating cash flow / US$176 M net income), reflecting solid but not exceptional ability to turn earnings into cash, which supports dividend sustainability yet leaves limited excess cash for aggressive reinvestment.

Executive Insights & Key Takeaways

Key Takeaways

1Y Return

▼ -22.7%

vs S&P -46.4pp

Piotroski

4/9

Moderate

CRA International (CRAI) has delivered a mixed return profile, posting a steep 22.7% loss over the past year while still generating positive three‑year (17.6% annualized) and five‑year (13.2% annualized) returns. The stock’s volatility of 45.8% and beta of 0.74 indicate higher price swings than the market but with lower systematic risk, yet a Sharpe ratio of -0.59 and a max drawdown of 38.3% reveal that recent performance has been poorly compensated for risk. Institutional ownership stands at an elevated 90.8%, suggesting confidence from large investors despite the recent underperformance relative to the S&P 500 (‑46.4% excess return). The company’s cash conversion cycle stretches to roughly 100 days, pointing to slower working‑capital turnover, while a Piotroski score of 4/9 signals middling accounting quality and mixed financial health. Together, these factors paint a picture of a firm with strong institutional backing but significant execution and valuation challenges that investors must weigh against its longer‑term return track record.

✅ Strengths

High institutional ownership (90.8%) provides a stabilizing anchor and suggests that sophisticated investors see intrinsic value beyond the recent 22.7% one‑year loss.
Three‑year annualized return of 17.6% demonstrates that CRAI can generate solid medium‑term upside, outperforming many peers despite short‑term volatility.
A beta of 0.74 indicates lower sensitivity to market swings, which could cushion the stock in broader equity corrections and support a defensive positioning.

⚠️ Risks

One‑year return of -22.7% combined with a max drawdown of 38.3% signals significant price weakness that may erode investor confidence and trigger further selling pressure.
Negative Sharpe ratio (-0.59) and a 46.4% excess underperformance versus the S&P 500 highlight that recent returns have not compensated for risk, raising concerns about valuation sustainability.
A cash conversion cycle of roughly 100 days suggests inefficient working‑capital management, potentially straining liquidity and limiting free‑cash‑flow generation.

CRAI

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Report written 2026-06-07 • Finexus

Disclaimer

This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

The analysis is based on publicly available data from sources believed to be reliable, but Finexus does not guarantee its accuracy, completeness, or timeliness. Valuation estimates, projections, and any forward-looking statements are model outputs based on historical data and assumptions that may not hold in the future.

Past performance is not indicative of future results. Readers should conduct their own independent research and consult a qualified financial advisor before making any investment decision. Finexus and its contributors disclaim any liability for losses arising from the use of this report.