CRA International (CRAI) Net Margin Compression Tests Bullish Earnings Growth Narratives

CRA International (CRAI) opened 2026 with Q1 revenue of US$201 million and basic EPS of US$1.71, while trailing 12 month revenue stood at US$770.7 million and EPS at US$7.27. The company has seen quarterly revenue move from US$181.9 million and EPS of US$2.65 in Q1 2025 to US$200.0 million and EPS of US$1.71 in Q1 2026. This positions investors to weigh forecast earnings growth against a softer net margin profile. Overall, the results put the focus squarely on how much of that earnings power is translating into sustainable profitability for shareholders.

See our full analysis for CRA International.

With the headline numbers on the table, the next step is to see how these results line up with the widely held narratives about CRA International's growth prospects, risks, and earnings quality.

Curious how numbers become stories that shape markets? Explore Community Narratives

Net margin slips from 7.3% to 6.2%

• Trailing 12 month net income of US$47.8 million on US$770.7 million of revenue works out to a 6.2% net margin, compared with 7.3% a year earlier on US$687.4 million of revenue and US$46.5 million of net income.
• What stands out for a bearish narrative is that this softer margin lines up with concerns about earnings quality, as the analysis flags a high level of non cash earnings and debt that is not well covered by operating cash flow, even though revenue over the same trailing period moved from US$687.4 million to US$770.7 million.

TTM EPS at US$7.27 alongside 14.2% earnings growth forecast

• Over the last twelve months, basic EPS was US$7.27 on US$770.7 million of revenue, while analysts are forecasting earnings growth of about 14.2% per year with revenue growth of about 4.7% per year.
• Supporters of a more bullish narrative argue that this combination of current EPS and faster forecast earnings growth is appealing, yet the trailing margin decline from 7.3% to 6.2% and net income easing from US$54.7 million to US$47.8 million over the last four reported trailing periods create a clear tension between growth expectations and recent profitability trends.
  • On one hand, the move in trailing revenue from US$697.5 million to US$770.7 million aligns with the idea of steady top line expansion that could help underpin those earnings forecasts.
  • On the other hand, the step down in trailing EPS from US$8.23 to US$7.27 across the most recent two trailing periods shows that recent reported profit per share has not moved in the same direction as the forward looking growth estimates.

P/E of 18.8x and DCF fair value of US$320.19 vs price of US$139.12

• The stock trades at about US$139.12 with a P/E of 18.8x, roughly in line with the US Professional Services industry at 18.9x and well below a peer average of about 35x, while the provided DCF fair value of US$320.19 sits well above the current price.
• What is often highlighted in a bullish angle is that this gap between price and DCF fair value, together with the lower P/E versus peers, points to potential value, yet the same analysis also notes a 1.64% dividend that is not well covered by free cash flow and debt that is not well covered by operating cash flow, so investors have to weigh valuation appeal against these cash coverage pressures.
  • The roughly in line P/E versus the wider industry suggests the market is pricing CRA International similarly to the sector overall even though the peer group trades at a much higher multiple.
  • At the same time, the weaker free cash flow coverage for the dividend and debt ties back to the earlier point about non cash earnings, reminding you to cross check headline profit and valuation against underlying cash generation.

For a fuller picture of how these numbers fit together with CRA International's story and valuation signals, it is worth seeing how other investors are joining the dots in the community narratives: Curious how numbers become stories that shape markets? Explore Community Narratives

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on CRA International's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

With sentiment clearly mixed between risks and rewards, it is worth checking the numbers yourself soon and deciding where you stand on CRA International. To help frame that view, take a closer look at the 2 key rewards and 4 important warning signs

See What Else Is Out There

CRA International's softer net margin, weaker cash coverage of debt and dividends, and recent EPS step down all raise questions about earnings quality and balance sheet strength.

If you want companies where reported profits line up more cleanly with cash generation and liabilities, it is worth hunting through the solid balance sheet and fundamentals stocks screener (44 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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