Simple Concepts Research Group

Are Investors Optimistic About Barrett Business Svcs (NASDAQ: BBSI)?

by | Feb 21, 2022 | 52 Week Lows, Stock Picks

barrett business services bbsi stock valuation

Barrett Business Svcs (BBSI) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Barrett Business Services (BBSI) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Barrett Business Svcs Fundamentals

BBSI Stock Rating

Stock Price Target: $82.41

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Barrett Business Services in comparison to the Business Services industry and the S&P 500.

Barrett Business Svcs is a Small Cap company with a Market Cap of $455.4M.

How are investors using Barrett Business Svcs earnings yield to assess the company?

Barrett Business (BBSI)_ Earnings Yield in Comparison to the Business Services Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Barrett Business is 18.48%, in comparison to 4.03% for the S&P 500 and 1.92% for the 10-year treasury bond. The median earnings yield for the Business Services industry is 6.25%.

What does Barrett Business Svcs Price-to-Earnings Ratio (P/E) tell investors about the company?

Barrett Business (BBSI)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Business Services Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Barrett Business is currently trading at a P/E of 13.39. The P/E for the Business Services industry is 33.24 and the P/E for the S&P 500 is 24.8.

What is the current Price-to-Sales Ratio (P/S) for Barrett Business Svcs?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Barrett Business is currently trading at a P/S of 0.52. The P/S for the Business Services industry is 2.28 and the P/S for the S&P 500 is 2.88.

How does Barrett Business Svcs Price-to-BookRatio (P/B) compare to the Business Services industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Barrett Business P/B ratio is 2.31. The P/B for the Business Services industry is 4.86 and the P/B for the S&P 500 is 4.42.

How attractive is Barrett Business Svcs Return on Invested Capital (ROIC) to investors?

Barrett Business (BBSI)_ Return on Invested Capital in Comparison to the Business Services Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Barrett Business ROIC is currently 15.68% in comparison to 10.96% for the Business Services industry and 9.10% for the S&P 500.

Barrett Business (BBSI)_ Price Target & 52-Week Price Range

How has BBSI stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Barrett Business has traded between the range of $59.38 and $86.82.

The current Analyst Price Target for Barrett Business is $82.41.

What is Barrett Business Svcs YOY Performance in comparison to its industry and the total market?

The YOY performance for Barrett Business is -17.09%. The Business Services industry has a YOY performance of 9.28% in comparison to the YOY S&P 500 performance of 10.59%.

Barrett Business (BBSI)_ YOY Performance in Comparison to the Business Services Industry and the S&P 500

Recent Financial Results

  • Net revenues in the third quarter of 2021 increased 9% to $247M compared to $227.5M in the third quarter of 2020
  • Total gross billings in the third quarter increased 12% to $1.69B compared to $1.51B in the same year-ago quarter
  • Net income for the third quarter of 2021 was $14.9M compared to $18.5M
  • Unrestricted cash and investments increased to $115.6M compared to $109.8M in the prior quarter. Company remains debt free apart from the $3.6M mortgage on its corporate headquarters

Stock Price Target: $82.41

Company Overview

BBSI Stock Rating

Barrett Business Services, Inc. provides business management solutions for small and mid-sized companies in the United States. It develops a management platform that integrates a knowledge-based approach from the management consulting industry with tools from the human resource outsourcing industry.

The company serves electronics manufacturers, light-manufacturing industries, agriculture-based companies, transportation and shipping enterprises, food processors, telecommunications companies, public utilities, general contractors in various construction-related fields, and professional services firms. Barrett Business Services, Inc. was incorporated in 1965 and is headquartered in Vancouver, Washington. The current CEO is Gary E. Kramer.

Be sure to add Barrett Business Svcs (BBSI) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.