Is Now An Opportune Moment To Examine CBIZ, Inc. (NYSE:CBZ)?

CBIZ, Inc. (NYSE:CBZ), is not the largest company out there, but it saw a decent share price growth of 12% on the NYSE over the last few months. The company's trading levels have approached the yearly peak, following the recent bounce in the share price. As a US$4.4b market cap stock, it seems odd CBIZ is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s take a look at CBIZ’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for CBIZ

What Is CBIZ Worth?

CBIZ appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 35.91x is currently well-above the industry average of 22.88x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that CBIZ’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

Can we expect growth from CBIZ?

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. With profit expected to grow by 79% over the next couple of years, the future seems bright for CBIZ. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in CBZ’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe CBZ should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on CBZ for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for CBZ, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing CBIZ at this point in time. In terms of investment risks, we've identified 1 warning sign with CBIZ, and understanding this should be part of your investment process.

If you are no longer interested in CBIZ, 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. 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.