Like a canary in a coal mine, the fortunes of the service industry can be an early warning sign for our overall economy. If service-sector companies, especially those heavily reliant on serving other businesses, start to head south, the economy could follow suit. If so, the latest results from executive-education specialist Corporate Executive Board (NYSE: EXBD) may spell bad news for everyone.

CEB shares fell as much as 26% on Thursday, hitting a four-year low. The drop followed CEB's fourth-quarter earnings report, in which net income declined 3% year over year to $22.5 million, or $0.63 per share. Management's lowered 2008 forecast, which lagged analysts' predictions, may have delievered the sharpest blow to shares.

Adding insult to injury for investors stung by Thursday's drop, IT business services firm Gartner (NYSE: IT) subsequently enjoyed a 16% jump in its shares, after beating estimates with income that rose 72% year over year.

CEB has recently drawn fire for failing to meet its lofty goals for contract value growth, which totaled only 10.7% in Q4. As CEO Tom Monahan told analysts Wednesday, "We saw slower growth than we would like in key segments of our customer base -- particularly at some of our largest customers, who maintained rather than grew their relationships with us in Q4."

Nonetheless, the earnings included some bright spots. CEB reported 25% growth in international contract value, and added $12 million in contract value for smaller, middle-market clients.

Despite its weaker forecasts, management aggressively pursued share buybacks in 2007. CEB spent more than $300 million dollars buying back 4.3 million shares of common stock, absorbing more than 10% of its shares outstanding. At the end of 2006, CEB had a war chest of roughly $300 million in cash and marketable securities, and no long-term debt. That gives the company plenty of room to not only capitalize on what management might consider a buying opportunity, but also weather any impending economic slowdown. At roughly $71 million, CEB's liquid funds aren't as mighty as they were in years past, but they still provide a nice cushion in increasingly uncertain times.

Watch for CEB to soften a bit in the coming year, as businesses throughout the economy cut back on discretionary expenses. CEB still generates heaps of cash through an effective and valuable business model, and with Thursday's haircut, shares now trade at 18 times earnings. With Gartner trading at 33 times earnings by comparison, any additional pullback from CEB's current price might spell opportunity for value hunters patient enough to wait for the company's growth to get back on track.

For related Foolishness:

Corporate Executive Board is both a Stock Advisor and an Inside Value recommendation. Take a free 30-day trial to either of these market-beating newsletters.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. He appreciates your questions, comments, and complaints. The Fool's disclosure policy is all about investors writing for investors.