Could Cash Machine Charles River Laboratories International Stock Be Your Next Buy?
Charles River Laboratories International (CRL) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market
What Is Happening With CRL
CRL stock is currently trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs, and also below its 3-year average.
The stock may not reflect it yet, but here is what’s going well for the company. Despite a 2.6% organic revenue decline in Q4 2025, Charles River is strengthening its core. Recent divestitures, including its CDMO and Cell Solutions businesses ($287M 2025 revenue), refine its portfolio. Improved Q4 2025 Discovery and Safety Assessment net bookings ($665M) and a rising $1.86B backlog, coupled with updated guidance for 100+ bps operating margin improvement, point to organic revenue growth returning in H2 2026.
CRL Has Good Fundamentals
- Good Cash Yield: Not many stocks offer free cash flow yield of 6.2%, but Charles River Laboratories International stock does
- Strong Margin: Last 12 month operating margin of 8.8%
- Growth: Last 12 revenue growth of -0.9% – revenue decline, but this selection is all about high yield and margin
- Valuation: CRL stock currently trading at 35% below 2Y high, 18% below 1M high, and at a PS lower than 3Y average.
Below is a quick comparison of CRL fundamentals with S&P medians.
| CRL | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Life Sciences Tools & Services | – |
| Free Cash Flow Yield | 6.2% | 4.0% |
| Revenue Growth LTM | -0.9% | 6.6% |
| Revenue Growth 3YAVG | 2.3% | 5.4% |
| Operating Margin LTM | 8.8% | 18.8% |
| Operating Margin 3YAVG | 12.4% | 18.2% |
| PE Ratio | -105.2 | 25.2 |
*LTM: Last Twelve Months
But What Is The Risk Involved?
While CRL stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. CRL took a hit of about 47% in the Dot-Com Bubble and nearly 70% during the Global Financial Crisis. The 2018 Correction was milder but still trimmed over 23%, and the Covid sell-off wiped out around 45%. The Inflation Shock in 2022 pushed CRL down more than 64%. Even solid companies like this aren’t immune when markets turn volatile. Drawdowns like these remind us that risk sticks around, no matter the fundamentals. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CRL Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
For more details and our view, see Buy or Sell CRL Stock.
Stocks Like CRL
Not ready to act on CRL? Consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Dipped last month & meaningfully below 2Y high
- Current P/S < last few year average
- Strong operating margin with no instances of large margin collapse
- High free cash flow yield
A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:
- Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
- Win rate (percentage of picks returning positive) of about 74% for 12-month period
- Strategy consistent across market cycles
Portfolios Over Individual Stock Picks
Individual stocks are unpredictable. A smart portfolio helps you invest, limits downside shocks, and provides upside exposure.
Why settle for average market returns? The Trefis High Quality (HQ) Portfolio invests in a diverse group of 30 stocks that have collectively delivered stronger upside with reduced volatility compared to the broader indices. Discover the methodology behind these smoother, higher returns by checking the HQ Portfolio performance data.