How Attractive Is Barrett Business Services Stock After Strong Three-Year Gain in 2025?

If you are wondering what to do next with Barrett Business Services stock, you are not alone. Maybe you are already celebrating a tidy gain after a five-year run up of 244.3%, or perhaps you are watching the minor pullback of 7.5% over the past month and wondering if it is signaling a new trend. From a wider lens, this company has been quietly piling up impressive returns, up 22.6% over the last year and a whopping 135% over the last three years. That steady track record does not just happen by accident, and it certainly grabs attention, especially when other companies have struggled to beat the market’s curve.

What is behind those moves? Recent market optimism about business services and evolving demand for flexible workforce solutions both seem to be in Barrett Business Services’ favor. Meanwhile, the company’s latest value score clocks in at 4 out of 6, meaning it is considered undervalued in four key checks. While there are always risks to weigh, many investors are looking at that score as a green light to dig deeper.

So is the stock still a bargain, or has the easy money already been made? Let’s walk through different valuation approaches to see just how attractive Barrett Business Services looks. Later in the article, I will share an even smarter way to think about whether the stock’s current price makes sense for you.

Barrett Business Services delivered 22.6% returns over the last year. See how this stacks up to the rest of the Professional Services industry.

Approach 1: Barrett Business Services Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its future cash flows and then discounting those flows back to their present value. This approach helps determine what the company should be worth today, given expectations for its future performance.

For Barrett Business Services, the current Free Cash Flow (FCF) is negative at $-11.33 Million, but projections show a significant turnaround. Analysts estimate annual Free Cash Flow to grow considerably, with projections reaching $66.65 Million by 2026. Beyond this, further forecasts have been extrapolated and suggest Free Cash Flow could climb to about $191.13 Million by 2035. This reflects analyst optimism for steady, long-term growth in the business.

Based on the two-stage Free Cash Flow to Equity model, the estimated intrinsic value for Barrett Business Services is $134.40 per share. With the DCF suggesting the stock is trading at a 66.6% discount to this value, the model indicates shares are significantly undervalued at current prices.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Barrett Business Services.

Our Discounted Cash Flow (DCF) analysis suggests Barrett Business Services is undervalued by 66.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Barrett Business Services Price vs Earnings (PE)

When evaluating a profitable company like Barrett Business Services, the Price-to-Earnings (PE) ratio is a particularly useful metric. It offers a straightforward measure of how much investors are willing to pay for each dollar of current earnings, providing a fast way to compare value across companies in the same sector.

What is considered a "normal" PE ratio, though, often comes down to two key factors: growth expectations and risk. Companies expected to grow earnings quickly, or those perceived as lower risk, often command higher PE ratios compared to those with slower growth or more uncertain outlooks.

At present, Barrett Business Services is trading at a PE ratio of 21.41x. This is below both the average for its Professional Services industry peers (26.79x) and the peer group average (33.24x). However, Simply Wall St goes a step further with its "Fair Ratio," which sets a benchmark based on the company’s individual profile, including earnings growth, profit margins, risk, size, and industry context. For Barrett Business Services, the Fair Ratio stands at 20.76x. By taking these specific fundamentals into account, the Fair Ratio gives a more precise read on whether the stock’s current multiple is justified. This can make it a more reliable gauge than generic peer or industry averages.

With the company’s actual PE ratio just slightly above its Fair Ratio, Barrett Business Services appears to be priced almost exactly in line with its underlying fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Barrett Business Services Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. Simply put, a Narrative is your personalized story about a company like Barrett Business Services, grounded in your own expectations for its future, such as revenue growth, profit margins, and what the company could fairly be worth. Narratives link this story to actual financial forecasts and a calculated fair value, making it easier to keep track of and test your investment thinking as new information comes in.

Narratives are easy and accessible for anyone to use on Simply Wall St’s Community page, where millions of investors share and compare their perspectives. With Narratives, you can quickly see if your outlook suggests Barrett Business Services is a buy, hold, or sell by comparing your Fair Value estimate to today’s share price. Even better, they’re updated automatically when new facts, like earnings or major news, are released.

For example, one investor might believe Barrett Business Services will deliver expansion-driven revenue growth of 7.4% annually, projecting strong gains and a higher fair value close to $51.50 per share. Another, more cautious investor might focus on rising competition and sector risks and arrive at a much lower estimate. Narratives allow you to track these different outlooks in real time, so you always know where your story stands.

Do you think there's more to the story for Barrett Business Services? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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