The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Barrett Business Services (BBSI). BBSI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 14.20, while its industry has an average P/E of 22.81. Over the past 52 weeks, BBSI's Forward P/E has been as high as 19.73 and as low as 10.05, with a median of 13.99.
Another valuation metric that we should highlight is BBSI's P/B ratio of 4.83. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 7.23. Within the past 52 weeks, BBSI's P/B has been as high as 9.36 and as low as 3.45, with a median of 4.92.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BBSI has a P/S ratio of 0.61. This compares to its industry's average P/S of 1.15.
Finally, we should also recognize that BBSI has a P/CF ratio of 11.79. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. BBSI's current P/CF looks attractive when compared to its industry's average P/CF of 18.17. BBSI's P/CF has been as high as 22.59 and as low as 10.03, with a median of 14.13, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Barrett Business Services is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BBSI feels like a great value stock at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research