CRA International (NASDAQ:CRAI) provides high-end consulting on high-stakes activities, from lawsuits to acquisitions to patent disputes. Its presence may signal bad news for clients, but it's become a nice business for CRA, and management is bullish on the company's prospects for 2007.
In the fiscal fourth quarter, revenues increased 17% to $86.3 million. However, net income fell from $6.6 million, or $0.55 per share, to $6.3 million, or $0.51 per share. The company endured heavy charges for executive compensation, which management believes is a one-time event.
CRA has built a strong reputation since its founding in 1965, which helps the company retain quality personnel while landing major clients, including Xerox (NYSE:XRX), Pfizer (NYSE:PFE), Nucor (NYSE:NUE), Office Depot (NYSE:ODP), and Time Warner (NYSE:TWX).
To improve growth, CRA has also acquired a variety of companies, including BBG (a consultancy for transfer pricing), ECL (a research firm focused on competition economics in Europe), and Lee & Allen (which provides forensic accounting services).
These acquisitions have significantly helped to boost CRA's overseas business. For example, in the fourth quarter, international business grew about 20% over the past year. About 27% of CRA's total revenues come from international markets.
CRA's latest conference call trumpeted the strong and continued demand for the company's sophisticated advisory services. Thanks to its low capital costs, the company's business model generates strong free cash flows, which can be used to fund even more purchases
Going forward, CRA sees revenue growth in the mid-to-high teens, with net income in the low-to-mid-twenties. Given the company's reliable growth record over the past 10 years -- as well as the favorable market environment (such as the continued growth in M&A) -- it's a good bet the company will live up to its forecast.
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Fool contributor Tom Taulli does not own shares mentioned in this article. He is currently ranked 1,623 out of 19,864 in CAPS.
