Dj Chmn Maleh Registers 7500 Of Cra International Inc >Crai

Have you been paying attention to shares of Gartner (IT)? Shares have been on the move with the stock up 4.1% over the past month. The stock hit a new 52-week high of $559 in the previous session. Gartner has gained 21.7% since the start of the year compared to the 27% move for the Zacks Business Services sector and the 21.9% return for the Zacks Consulting Services industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 5, 2024, Gartner reported EPS of $2.5 versus consensus estimate of $2.45.

For the current fiscal year, Gartner is expected to post earnings of $11.88 per share on $6.24 billion in revenues. This represents a 4.85% change in EPS on a 5.61% change in revenues. For the next fiscal year, the company is expected to earn $13.35 per share on $6.74 billion in revenues. This represents a year-over-year change of 12.38% and 8.07%, respectively.

Valuation Metrics

Gartner may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Gartner has a Value Score of D. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 46.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 27.8X. On a trailing cash flow basis, the stock currently trades at 39.1X versus its peer group's average of 20.9X. Additionally, the stock has a PEG ratio of 3.43. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Gartner currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Gartner passes the test. Thus, it seems as though Gartner shares could have a bit more room to run in the near term.

How Does IT Stack Up to the Competition?

Shares of IT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Charles River Associates (CRAI). CRAI has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of D.

Earnings were strong last quarter. Charles River Associates beat our consensus estimate by 12.03%, and for the current fiscal year, CRAI is expected to post earnings of $7.47 per share on revenue of $676.12 million.

Shares of Charles River Associates have gained 6.3% over the past month, and currently trade at a forward P/E of 28.84X and a P/CF of 21.86X.

The Consulting Services industry is in the top 23% of all the industries we have in our universe, so it looks like there are some nice tailwinds for IT and CRAI, even beyond their own solid fundamental situation.

Zacks Investment Research

CRA International, Inc. CRAI reported impressive third-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The stock has risen 9.6% since the earnings release in response to the better-than-expected results and strong guidance.

CRAI reaffirmed its 2024 constant currency revenue guidance range to $670 million-$685 million in the third quarter of 2024. The guidance range's midpoint ($677.5 million) is higher than the current Zacks Consensus Estimate of $676.2 million. The company continues to expect a non-GAAP EBITDA margin in the range of 12.2%-13%.

Quarterly adjusted EPS came in at $1.77, which surpassed the Zacks Consensus Estimate by 12% and increased 56.6% year over year. Revenues of $167.7 million beat the consensus mark by a slight margin and increased 13.7% from the year-ago quarter.

Charles River Associates Price, Consensus and EPS Surprise

Charles River Associates price-consensus-eps-surprise-chart | Charles River Associates Quote

CRAI: Other Quarterly Details

The company delivered 76% utilization, while the headcount was down 3.6% year over year. Non-GAAP EBITDA increased 54.8% year over year to $21.3 million. The non-GAAP EBITDA margin improved 340 basis points year over year to 12.7%, in line with our estimate.

The company exited the quarter with a cash and cash equivalents balance of $24.5 million compared with $24.6 million witnessed at the end of the prior quarter. It generated $31.6 million of cash from operating activities, and capex was $3 million. In the quarter, Charles River paid out $2.9 million in dividends.

Currently, Charles River carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Earnings Snapshots

Omnicom OMC reported impressive third-quarter 2024 results, wherein earnings and revenues beat the Zacks Consensus Estimate.

OMC’s earnings of $2 per share beat the consensus estimate by 3.1% and increased 9.1% year over year. Total revenues of $3.9 billion surpassed the consensus estimate by 2.3% and increased 8.5% year over year.

Equifax EFX reported mixed third-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, while revenues missed the same.

EFX’s adjusted earnings were $1.8 per share, beating the Zacks Consensus Estimate by a slight margin and increasing by 5.1% from the year-ago quarter’s actual. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but increased 9.3% from the year-ago quarter.

Zacks Investment Research

CRA International (CRAI) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, CRAI crossed above the 20-day moving average, suggesting a short-term bullish trend.

The 20-day simple moving average is a well-liked trading tool because it provides a look back at a stock's price over a 20-day period. Additionally, short-term traders find this SMA very beneficial, as it smooths out short-term price trends and shows more trend reversal signals than longer-term moving averages.

Like other SMAs, if a stock's price is moving above the 20-day, the trend is considered positive. When the price falls below the moving average, it can signal a downward trend.