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Barrett Business Services, Inc. (NASDAQ:BBSI) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of BBSI, it is a financially-robust company with a strong history of performance, trading at a great value. Below, I've touched on some key aspects you should know on a high level. If you're interested in understanding beyond my broad commentary, take a look at the report on Barrett Business Services here.
Good value with proven track record
BBSI delivered a bottom-line expansion of 65% in the prior year, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 37% return to shareholders, which is an optimistic signal for the future. With a debt-to-equity ratio of 3.4%, BBSI’s debt level is low. Investors’ risk associated with debt is very low and the company has plenty of headroom to grow debt in the future, should the need arise. BBSI appears to have made good use of debt, producing operating cash levels of 24.95x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
BBSI's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if BBSI's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, BBSI's share price is trading below the group's average. This bolsters the proposition that BBSI's price is currently discounted.
For Barrett Business Services, there are three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for BBSI’s future growth? Take a look at our free research report of analyst consensus for BBSI’s outlook.
- Dividend Income vs Capital Gains: Does BBSI return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from BBSI as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BBSI? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.