Are Investors Undervaluing CRA International (CRAI) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is CRA International (CRAI). CRAI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 19.19, which compares to its industry's average of 33.49. Over the last 12 months, CRAI's Forward P/E has been as high as 23.16 and as low as 12.35, with a median of 18.93.
Investors should also note that CRAI holds a PEG ratio of 1.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CRAI's industry currently sports an average PEG of 2.94. Over the last 12 months, CRAI's PEG has been as high as 1.73 and as low as 0.95, with a median of 1.26.
Another valuation metric that we should highlight is CRAI's P/B ratio of 3.58. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. CRAI's current P/B looks attractive when compared to its industry's average P/B of 8.10. Over the past year, CRAI's P/B has been as high as 4.33 and as low as 1.55, with a median of 2.79.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CRAI has a P/S ratio of 1.21. This compares to its industry's average P/S of 1.82.
Finally, investors will want to recognize that CRAI has a P/CF ratio of 12.07. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. CRAI's P/CF compares to its industry's average P/CF of 22.87. CRAI's P/CF has been as high as 14.57 and as low as 6.98, with a median of 11, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that CRA International is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CRAI feels like a great value stock at the moment.
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