CRA International Year-end Changes - Analyst Blog

A leading global consulting firm CRA International Inc (CRAI) recently announced that it is changing its accounting year end from November 30 to December 31, effective 2011. The new accounting year will begin from January 2, 2011 and end on December 31, 2011.

Under the new reporting year, all the four quarters will be for 13 weeks whereas previously, the first, second and fourth quarters comprised 12 weeks each and third quarter was a 16-week period. The third quarter period will now be shortened by three weeks.

Additionally, due to the change in the fiscal year-end, the Boston, Massachusetts-based company will report a five-week transition period from November 28, 2010 to January 1, 2011. The company is scheduled to report its fourth quarter results in mid-January 2011.

CRA International, formerly Charles River Associates said that the new accounting year change will make its comparison, on both a quarterly and annual basis, between its industry peers like FTI Consulting Inc. (FCN) and LECG Corporation (XPRT) easier and consistent.

During the third quarter, CRA International reported third quarter earnings of 30 cents, in line with the Zacks Consensus Estimate, primarily owing to the uptick in utilization rate backed by successful restructuring actions.

Moreover, business conditions have started to improve with healthy new business lead flow, improved conversion rate and active pipeline of both litigation and management consulting businesses.

Going forward, we believe the company's growth initiatives, improving international operations, new business wins and solid cash balance will help it to generate positive results.

However, we remain cautious on the stock as positive impacts will likely be marred by clients hesitant to spend aggressively on major consulting projects, given the current market volatility. The company's growth can also be hindered by a continuous decline in organic revenues. We prefer to remain on the sidelines as overall visibility remains hazy and thereby maintain our long-term Neutral recommendation on the stock.