It's been a pretty great week for Barrett Business Services, Inc. (NASDAQ:BBSI) shareholders, with its shares surging 12% to US$66.50 in the week since its latest quarterly results. It looks like a credible result overall - although revenues of US$228m were what the analysts expected, Barrett Business Services surprised by delivering a (statutory) profit of US$2.40 per share, an impressive 63% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Barrett Business Services' three analysts is for revenues of US$940.4m in 2021, which would reflect a reasonable 5.3% increase on its sales over the past 12 months. Statutory per share are forecast to be US$5.09, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$943.6m and earnings per share (EPS) of US$5.19 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$80.25, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Barrett Business Services at US$85.00 per share, while the most bearish prices it at US$74.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Barrett Business Services is an easy business to forecast or the the analysts are all using similar assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Barrett Business Services' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Barrett Business Services'historical trends, as next year's 5.3% revenue growth is roughly in line with 4.5% annual revenue growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 8.0% next year. So although Barrett Business Services is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$80.25, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Barrett Business Services. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Barrett Business Services going out to 2022, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Barrett Business Services you should know about.
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. 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.
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