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Barrett Business Services Inc. Message Board

  • extraordinarypaperclips extraordinarypaperclips Oct 30, 2013 3:15 PM Flag

    BBSI's 2014 earnings: $4.10?

     

    So, based on BBSI's Q4 guidance, BBSI will earn $2.82 - $2.87 in 2013 - let's take the high end of BBSI's Q4 EPS $1.15-1.20 guidance, which makes BBSI's 2013 EPS $2.87.

    I think Mr. Elich effectively guided to at least 30% revenue growth next year. Let's assume 30%. Assuming margins stay the same, that takes BBSI's $2.87 to $3.73. But then Mr. Elich suggested a further 10 basis point increase in operating margins during the conference call. BBSI's operating margin is going to end this year at roughly 1.0%. So an increase of 10 basis points (i.e., taking the 1.0% operating margin to a 1.1% operating margin), increases EPS by another 10% (assuming the same non-operating income/expenses, tax rates and share count).

    That brings BBSI's 2014 EPS to $4.10, if my math is correct.

    In other words, at $82.00 a share, that suggests BBSI is 20x next year's earnings. Interesting...

    Sentiment: Strong Buy

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    • The volume of this stock is stink. Only 30000 shares daily. It went up more than 5 dollars today with 36000 shares traded. If a big holder decide to sell, then disaster. this market is very much manipulated. Why only very thinly trade stock can go up. Maybe thinly traded stock has no high frequency traders.

    • So this is a workers compensation insurer disguised as a PEO. insuring companies for half or less of what the insurance industry would charge. Various CA insurers are in trouble now because they underreserved their future claims by a lot. The main question is how underreserved is BBSI for future payouts of claims? Also, at the end of 2014 they are prohibited from this self insurance play and have not announced an alternative. I think this means they cannot write annual policies beginning 1-1-2014, but must have expiration dates of 12-31-14. Without a cost effective alternative, this is when the losses keep giving with no premium to outrun it. To me it is scary and it will hit sometime, but because there is very little government oversight (compared to real insurance companies) they might be able to outrun it for another year?

    • stock price is a double from here

      • 1 Reply to ostliejobo
      • Did the analysts for MIG or TWGP understand? Heck if I know. What I do know is those were the cheapest WC carriers in CA and they are toast. BBSI insures at even (much) cheaper rates than those two. Sometime, the manure must hit the fan, in my opinion. I did not listen to the call. Did they mention what they are going to do after 1-1 when they can only write a policy until 12-31/2014? It takes months, and even years sometimes to license a new carrier in CA, so if they have not already submitted, they may not get that. Plus it take a ton of capital.

 
BBSI
28.30-0.04(-0.14%)Dec 26 4:00 PMEST

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