Is Now An Opportune Moment To Examine TrueBlue, Inc. (NYSE:TBI)?

TrueBlue, Inc. (NYSE:TBI), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$30.03 at one point, and dropping to the lows of US$19.98. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether TrueBlue's current trading price of US$19.98 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at TrueBlue’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for TrueBlue

Is TrueBlue still cheap?

Good news, investors! TrueBlue is still a bargain right now according to my price multiple model, which compares 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 TrueBlue’s ratio of 10.15x is below its peer average of 17.1x, 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 TrueBlue’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 TrueBlue look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 negative profit growth of -7.3% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for TrueBlue. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although TBI is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to TBI, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on TBI for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So while earnings quality is important, it's equally important to consider the risks facing TrueBlue at this point in time. While conducting our analysis, we found that TrueBlue has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in TrueBlue, 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.