Is There Now an Opportunity in CBIZ After a 36.6% Year to Date Slide?

• Wondering if CBIZ is now a bargain or a value trap after its recent slide? This article will walk through the numbers so you can decide with confidence.
• The stock has bounced 4.9% over the last week, but that is against a much steeper backdrop of a 6.7% drop over 30 days and a painful 36.6% fall year to date, leaving 1 year returns at around -38.4% despite a strong 102.5% gain over 5 years.
• Those moves have come as investors reassess service focused businesses like CBIZ in a higher rate, more selective market, where steady, fee based models are being weighed more carefully against growth expectations. Sector rotation toward companies with clearer long term growth narratives and less perceived cyclicality has also put pressure on mid cap names, helping explain why CBIZ has been left behind despite its longer term track record.
• Even so, on our checks CBIZ looks undervalued in 4 out of 6 areas, giving it a value score of 4/6. This article will dig into that score, comparing different valuation approaches before finishing with a more holistic way to judge what the stock might really be worth.

Find out why CBIZ's -38.4% return over the last year is lagging behind its peers.

Approach 1: CBIZ Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and discounting those cash flows back to today, using a required rate of return.

For CBIZ, the model starts with last twelve month Free Cash Flow of about $80.1 Million, then layers on analyst forecasts and longer term estimates. Simply Wall St uses a 2 stage Free Cash Flow to Equity approach, with explicit projections out to 2035, where FCF is expected to rise to roughly $479 Million as growth gradually moderates over time.

When all those future cash flows are discounted back into today s dollars, the model arrives at an intrinsic value of $125.25 per share. That indicates CBIZ is trading at a 58.9% discount to its estimated fair value. This suggests the recent share price weakness has pushed the stock materially below what its long term cash generation would justify.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CBIZ is undervalued by 58.9%. Track this in your watchlist or portfolio, or discover 919 more undervalued stocks based on cash flows.

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

Approach 2: CBIZ Price vs Earnings

For consistently profitable companies like CBIZ, the Price to Earnings, or PE, ratio is a useful way to gauge how much investors are willing to pay today for each dollar of current earnings. In general, faster growing and lower risk businesses tend to have higher PE ratios, while slower, more cyclical or riskier companies tend to trade on lower multiples.

CBIZ currently trades on a PE of about 26.4x, which is slightly above the broader Professional Services industry average of roughly 24.3x, but below the peer group average of around 42.7x. Simply Wall St also calculates a Fair Ratio for CBIZ of about 30.9x. This is the PE level the company might reasonably trade at given its earnings growth outlook, profitability profile, industry positioning, size and risk characteristics.

This Fair Ratio is more informative than a simple comparison with peers or the sector because it adjusts for CBIZ specific factors such as its growth rate, margins and risk profile, rather than assuming one size fits all. With the Fair Ratio of 30.9x sitting meaningfully above the current 26.4x multiple, the PE based view points to CBIZ being modestly undervalued on earnings.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1439 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your CBIZ Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply investor written stories that connect what you believe about a company like CBIZ, its future revenue, earnings and margins, to a financial forecast and then to a Fair Value that you can compare with today s share price to decide whether to buy, hold or sell. Narratives on Simply Wall St, available on the CBIZ Community page used by millions of investors, make this process easy by turning your assumptions into a living, dynamic model that automatically updates when new information hits, such as earnings results, share repurchases, or launches like the Vertical Vector AI platform. For CBIZ, one investor might build an optimistic Narrative around successful Marcum integration, resilient advisory demand and digital efficiency gains that supports a Fair Value near the higher analyst target of about $95. In contrast, a more cautious investor could focus on pricing pressure, acquisition risk and leverage, arriving at a Fair Value much closer to the current price. It is this range of clearly explained perspectives that helps you quickly see where you stand and how confident you are.

Do you think there's more to the story for CBIZ? Head over to our Community to see what others are saying!

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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