Is Now An Opportune Moment To Examine Barrett Business Services, Inc. (NASDAQ:BBSI)?

By
Simply Wall St
Published
May 11, 2021
NasdaqGS:BBSI

Barrett Business Services, Inc. (NASDAQ:BBSI), is not the largest company out there, but it led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Barrett Business Services’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Barrett Business Services

What is Barrett Business Services worth?

Great news for investors – Barrett Business Services is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Barrett Business Services’s ratio of 18.44x is below its peer average of 28.17x, which indicates the stock is trading at a lower price compared to the Professional Services industry. Although, there may be another chance to buy again in the future. This is because Barrett Business Services’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Barrett Business Services look like?

earnings-and-revenue-growth
NasdaqGS:BBSI Earnings and Revenue Growth May 11th 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 2.1% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Barrett Business Services, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since BBSI is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on BBSI for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BBSI. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Barrett Business Services has 1 warning sign we think you should be aware of.

If you are no longer interested in Barrett Business Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. 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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