What Happened?
Shares of lab services company Charles River Laboratories (NYSE: CRL) fell 5.8% in the morning session after the company reported third-quarter results that revealed significant underlying weaknesses.
The lab services company posted revenue of $1.00 billion, which was flat compared to the previous year, and adjusted earnings of $2.43 per share. Although both figures surpassed Wall Street's forecasts, adjusted earnings were down from the $2.59 reported in the same quarter last year. Investor concern appeared to focus on a sharp decline in cash generation, as the company's free cash flow margin plummeted to 3.5% from 21.1% a year ago. Furthermore, adjusted EBITDA missed consensus estimates by over 20%. Despite management slightly raising its full-year adjusted earnings guidance, the market's negative reaction suggests the substantial cash flow and EBITDA issues overshadowed the headline beats.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Charles River Laboratories? Access our full analysis report here.
What Is The Market Telling Us
Charles River Laboratories’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 17.3% on the news that the company reported strong first quarter 2025 results which significantly beat analysts' organic revenue and EPS estimates, and featured a raise to full-year EPS guidance. Zooming out, we think this was a solid print.
Charles River Laboratories is down 9.9% since the beginning of the year, and at $164.50 per share, it is trading 25.5% below its 52-week high of $220.69 from November 2024. Investors who bought $1,000 worth of Charles River Laboratories’s shares 5 years ago would now be looking at an investment worth $653.85.
The biggest winners—Microsoft, Alphabet, Coca-Cola, Monster Beverage—were all riding powerful megatrends before Wall Street caught on. We’ve just identified an under-the-radar profitable growth stock positioned at the center of the AI boom. Get it FREE here before the crowd discovers it. GO HERE NOW.
