{
  "@context": "https://orbyd.app/schemas/dossier.v1.json",
  "ticker": "CRAI",
  "name": "CRA International, Inc.",
  "url": "https://orbyd.app/dossiers/CRAI/",
  "json_url": "https://orbyd.app/dossiers/CRAI.json",
  "status": "DORMANT",
  "current_conviction": "MEDIUM",
  "graded_conviction": null,
  "archetype": {
    "code": "a2",
    "n": 2
  },
  "current_thesis": "Beat-and-raise on 2026-08-06 — record $210.8M quarter (+12.8% YoY) and FY26 guide lifted to $805–820M — has not re-rated a stock still 23.6% below its $221.74 52-week high. The leg is a toll on record M&A and litigation volume; the unresolved question is whether margin follows revenue at the ~2026-10-29 (est.) Q3 print.",
  "invalidation_trigger": "A weekly close below $155 surrenders the bulk of the three-month recovery leg and prices the 2026-08-06 beat-and-raise as a cycle high; a Q3 print (~2026-10-29, est.) that trims the $805–820M FY26 guide or extends DSO past 113 days is the confirming fundamental break.",
  "catalyst_date": "2026-08-25",
  "outcome": "OPEN",
  "outcome_date": null,
  "invalidation_fired": null,
  "themes": [
    "managed-care-health-services"
  ],
  "tags": [],
  "sources": [],
  "notes": [
    "Fiscal year is a 52/53-week year ending near Dec 31, so quarter-end dates shift year to year and some comparisons include an extra week.",
    "FY2026 revenue guidance of $805-820M is stated on a constant-currency basis; reported revenue can diverge with FX given international revenue grew 32.9% YoY in Q2.",
    "Revenue is a function of consultant headcount and utilization; a single senior practice-leader departure can move a practice run-rate with no change in end-market demand.",
    "Quarterly dividend is $0.57/share as declared 2026-08-06; the buyback runs alongside it and is not separately guided in dollars."
  ],
  "body_markdown": "## Current Thesis\n\nCRA International sells economists and expert testimony by the billable hour into two end-markets that both ran hot in the June quarter: merger review and litigation. The 2026-08-06 Q2 FY2026 print delivered record revenue of $210.815M (+12.8% YoY) against a $198.903M consensus, and management lifted FY2026 constant-currency revenue guidance to $805–820M from $785–805M — the new floor sits exactly at the old ceiling, and above the $801.21M consensus. The narrative leg an investor buys here is a toll on deal and litigation volume, with an operating-leverage kicker from utilization.\n\nWhat the print did not deliver is margin. Non-GAAP diluted EPS came in at $2.16 against $2.15 consensus — an in-line bottom line on a roughly $12M revenue beat — and the non-GAAP EBITDA margin band was reaffirmed at 12.0–13.0% rather than raised. The stock closed $169.31 on 2026-08-07, 23.6% below its $221.74 52-week high, with RSI(14) at 48.0. Records are printing at the revenue line; the multiple has not followed.\n\n**Life-cycle: MATURING.** The antitrust engine has now produced six consecutive record quarters per management's 2026-08-06 commentary, so this is a known, working story rather than a fresh one. But the equity is a quarter below its high after a beat-and-raise, RSI is mid-range, and there is no new marginal bid visible in the price. Well known, still working, moderating flow.\n\n## Bull Case\n\n- **Record quarter, and it beat wide.** Q2 FY2026 revenue $210.815M vs $198.903M consensus; +12.8% YoY, the highest quarterly revenue in company history (2026-08-06 release).\n- **Guidance raised, not merely reaffirmed.** FY2026 constant-currency revenue guidance moved to $805–820M from $785–805M on 2026-08-06, against $801.21M consensus.\n- **Utilization at 77%** with net headcount +3.3% (Q2 FY2026 call, 2026-08-06). Consulting revenue is headcount × utilization × rate; both inputs moved the right way in the same quarter.\n- **International +32.9% YoY**, described by management as organic expansion in European Life Sciences and Antitrust rather than acquired (2026-08-06 call).\n- **The demand backdrop is quantified, not asserted.** Management cited $1.6 trillion of global M&A in the June quarter, case filings +11% and court judgments +5% (2026-08-06 call). Antitrust & Competition Economics logged its sixth consecutive record quarter.\n- **A second demand line is forming.** Management flagged Energy-practice growth off utility data-center load forecasts and \"demand amplification from AI complexity\" in Forensic Services and incident response (2026-08-06 call). Neither is yet a disclosed dollar figure.\n- a $0.57/share quarterly dividend was declared 2026-08-06, record 2026-08-25, payable 2026-09-14. The buyback ran while the shares sat well below their 52-week high.\n- **Balance-sheet capacity added.** The credit facility was expanded on 2026-08-06 to a five-year $400M structure — a $75M term loan plus a $325M revolver — replacing a $300M revolver.\n\n## Bear Case\n\n- **The beat did not reach the bottom line.** Roughly $12M of revenue upside converted to a $0.01 non-GAAP EPS beat ($2.16 vs $2.15). The EBITDA margin guide stayed at 12.0–13.0%. Growth is being bought with headcount and comp, and there is no evidence yet of scale economics.\n- **Receivables lengthened.** Days sales outstanding moved to 113 days from 100 days in the prior quarter (2026-08-06 call). In a labor firm, cash collection lagging revenue growth is the first place quality-of-earnings problems show up.\n- **The M&A input is cyclical and near a high.** The antitrust streak is levered to $1.6T of quarterly global deal volume. Expert-economics work is a lagging derivative of announcements; when the announcement pipeline thins, the backlog rolls off with a quarter or two of delay.\n- **Antitrust intensity is policy-dependent.** Second Request and merger-challenge workloads shift with the enforcement stance of the reviewing agencies. That variable is outside management's control and is not disclosed as a backlog number.\n- **Price is not confirming the fundamentals.** A record quarter and a raise left the stock at $169.31 on 2026-08-07, 23.6% under $221.74. The market is compressing the multiple against improving revenue — a pattern that continues until it doesn't, and nothing in the 2026-08-06 disclosure forces it to stop.\n- **FX sits between the guide and the print.** The $805–820M range is constant-currency; with international revenue growing 32.9%, translation is a live wedge between guided and reported figures.\n\n## Setup & Price Structure\n\nMeasured, as of the 2026-08-07 close: $169.31; 52-week high $221.74; distance from high −23.6%; three-month return +21.8%; RSI(14) 48.0.\n\nInferred from that set: the +21.8% three-month advance is a partial retracement of a larger drawdown, and a mid-range RSI on the session after a beat-and-raise says the advance stalled going into the print rather than extending through it. There is no momentum extension to fade and no evidence of a stretched position — RSI 48 is the middle of the range, and a name 23.6% below its high is not where crowding usually shows up.\n\nPositioning observables, stated without a verdict: the earnings binary is behind rather than ahead, so there is no imminent print compressing the window; new debt capacity ($400M facility, 2026-08-06) was added rather than equity issued, so there is no issuance-into-strength signature; and no insider transactions appear in the filing record reviewed for this note. Retail-sentiment coverage on this name is sparse — the most recent third-party headline before the print was a 2026-07-07 client engagement item — which is the opposite of the clustering that marks a saturated narrative.\n\nThe structure to watch is whether the recovery leg extends toward the $221.74 high or gives back the three-month advance. The $155 area marks where most of that advance would be surrendered.\n\n## Catalyst Calendar (next 30 days)\n\n- **2026-08-25** — Dividend record date, $0.57/share (payable 2026-09-14, declared 2026-08-06). Confirms capital-return cadence; it resolves nothing about demand.\n- **~2026-08-14 (est.)** — Q2 FY2026 Form 10-Q. The receivables detail behind the 113-day DSO and practice-level revenue splits land here; the 2026-08-06 release and call gave the headline but not the composition.\n- **~2026-10-29 (est.)** — Q3 FY2026 results. Outside the 30-day window and the genuine binary: it is the first test of whether the $805–820M FY guide holds and whether 12.0–13.0% EBITDA margin becomes a floor or a ceiling.\n\nNo scheduled regulatory, product or index event is identified inside 30 days.\n\n## What Would Change Our Mind\n\nThe structure that has to hold is the three-month recovery leg. A weekly close below $155 says the market has read the 2026-08-06 beat-and-raise as a cycle high and is re-pricing the antitrust streak as peak-cycle earnings rather than a run-rate — at that point the fundamental improvement has stopped mattering to the tape and the case is broken on its own terms.\n\nThree fundamental conditions would do the same work independently:\n\n1. **A trimmed or unchanged-to-lower FY2026 guide at the Q3 print (~2026-10-29, est.).** The raise to $805–820M is the whole reason the second half is de-risked; walking it back removes the leg.\n2. **A third consecutive sequential DSO extension past 113 days**, or any allowance/write-off commentary in the Q3 10-Q. Cash conversion deteriorating alongside record revenue changes what the revenue is worth.\n3. **The antitrust streak breaking** — management describing Antitrust & Competition Economics as flat or declining after six consecutive record quarters, or a global quarterly M&A figure materially below the $1.6T cited for Q2 2026.\n\nConversely, the case strengthens if the Q3 print pairs revenue inside or above the raised band with an EBITDA margin at or above the 13.0% top of the guided range — that would be the first evidence that headcount growth is producing operating leverage instead of consuming it.\n\n## Correlation Notes\n\n- **Primary driver: announced global M&A volume and litigation filing counts.** Management anchored the quarter to $1.6T of Q2 deal activity and +11% case filings. CRAI trades with the deal cycle on a lag, not with the tape on the day.\n- **Peer complex: expert-services and litigation-consulting names** — FTI Consulting, Exponent, Huron, ICF. Read their prints for the same two inputs; divergence between CRAI and that group on a common quarter is more informative than CRAI's absolute move.\n- **The AI/data-center linkage is second-order and small.** Management cited Energy-practice growth from utility data-center load forecasting and AI-driven complexity in Forensic Services (2026-08-06), but neither is a disclosed revenue line. Treating CRAI as a data-center infrastructure proxy overstates the exposure; it is a professional-services firm whose customers happen to include utilities doing load studies.\n- **Rate and small-cap beta.** With a market capitalization in small-cap territory and a newly enlarged $400M facility, the name carries the discount-rate sensitivity of the Russell complex independent of anything in the operating business.",
  "first_seen": "2026-07-30",
  "last_analyzed": "2026-08-08T07:29:12+00:00",
  "last_synthesized": "2026-08-08",
  "last_update_source": "watchlist_research",
  "license": "Content © orbyd. Cite the canonical URL."
}