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What Is Barrett Business Services, Inc.'s (NASDAQ:BBSI) Share Price Doing?

Simply Wall St

Barrett Business Services, Inc. (NASDAQ:BBSI), which is in the professional services business, and is based in United States, saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$90.44 and falling to the lows of US$79.25. 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 Barrett Business Services's current trading price of US$86.30 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 Barrett Business Services’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Barrett Business Services

Is Barrett Business Services still cheap?

Good news, investors! Barrett Business Services is still a bargain right now. 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 Barrett Business Services’s ratio of 13.42x is below its peer average of 19.4x, which suggests the stock is undervalued compared to the Professional Services industry. What’s more interesting is that, Barrett Business Services’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Barrett Business Services generate?

NasdaqGS:BBSI Past and Future Earnings, October 2nd 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Barrett Business Services, it is expected to deliver a negative earnings growth of -6.3%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although BBSI is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to BBSI, 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 an eye on BBSI for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Barrett Business Services. You can find everything you need to know about Barrett Business Services in the latest infographic research report. If you are no longer interested in Barrett Business Services, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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 editorial-team@simplywallst.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.