Want to know what a stock market freak-out looks like? CRA International
Looking at fiscal third-quarter results, revenue climbed about 25%, boosted partly by acquisitions. Margins eased off slightly while operating income grew by about 20%. Recouping some of that through a lower tax rate, CRA managed to post 47% income growth and 27% earnings-per-share growth.
I don't often plug myself into Wall Street chatter, so I'm not entirely sure why the stock is down so much today. Yes, the company missed the revenue estimate, but by only about 4%. Likewise, the range of earnings guidance pretty much seemed to center around the prerelease mean estimate. If those are investors' only reasons for selling off the stock, it seems like a bit of an overreaction to me.
Sure, CRA has to deal with competition, whether from privately held companies like Bain and McKinsey or public companies like Accenture
Since I'm not entirely sure why the market responded so badly to this report, I won't be in any hurry to dive into these shares. There's usually plenty of time to get into good stocks, even if you do miss their panic-induced dips. What's more, I'm always a bit skeptical of companies that rely on acquisitions, not to mention those that dilute their shareholders (note CRA's 16% year-over-year increase in the number of shares) and create potentially significant stock option expense. Maybe I'll be crying in my beer for missing this opportunity, but that's a risk I'll just have to take.
Consult with further Foolishness:
- Sarbanes Pain Is Resources Connection's Gain
- Accenture Cranks Out Cash
- Like CRA? Be Patient
- Diamond Cluster Gets Cluster-Bombed
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).