CRL

We rate CHARLES RIVER LABORATORIES INTERNATIONAL, INC. (CRL) as a Hold with a composite score of 54.6/100 at a current price of $166.05. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (79th percentile) and value (70th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (32th percentile) and quality (46th percentile) tempers our overall conviction. We assign a No Moat rating (38/100), High uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

CHARLES RIVER LABORATORIES INTERNATIONAL, INC. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 54.6/100 places it at rank #1329 in our full 7,333-stock universe. At $7.3B in market capitalization, CHARLES RIVER LABORATORIES INTERNATIONAL, INC. is a mid-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (79th percentile), revenue contraction of -2% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 35% (-25.0pp vs sector) narrow to operating margins of 11% (+7.1pp vs sector) and net margins of 5.1%, yielding a gross-to-net conversion rate of 15%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $166.05, CHARLES RIVER LABORATORIES INTERNATIONAL, INC. appears undervalued relative to its fundamentals. Our value factor score of 70/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 40.7x (a 71% premium to the sector median of 23.7x), EV/EBITDA of 19.5x (at a premium), P/B of 2.6x, P/S of 2.1x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a High uncertainty rating to CHARLES RIVER LABORATORIES INTERNATIONAL, INC.. Key risk factors include elevated market sensitivity (beta of 1.47), significant leverage (124% debt-to-equity), elevated valuation multiple (P/E 40.7x) that leaves limited margin for error. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.47); significant leverage (124% debt-to-equity); elevated valuation multiple (P/E 40.7x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 51th percentile and quality factor at the 46th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate CHARLES RIVER LABORATORIES INTERNATIONAL, INC.'s capital allocation as Poor. Key concerns include suboptimal returns on capital. Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — CHARLES RIVER LABORATORIES INTERNATIONAL, INC. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, CHARLES RIVER LABORATORIES INTERNATIONAL, INC. receives a Hold rating with a composite score of 54.6/100 (rank #1329 of 7,333). Our quantitative framework assigns a No Moat (38/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 55/100.

Our analysis supports a neutral stance on CHARLES RIVER LABORATORIES INTERNATIONAL, INC.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.