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Are Investors Undervaluing Barrett Business Services (BBSI) Right Now?

Zacks Equity Research

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Barrett Business Services (BBSI). BBSI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 15.45. This compares to its industry's average Forward P/E of 22.81. Over the last 12 months, BBSI's Forward P/E has been as high as 18.63 and as low as 10.05, with a median of 13.85.

Another notable valuation metric for BBSI is its P/B ratio of 5.25. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 7.70. Over the past 12 months, BBSI's P/B has been as high as 8.07 and as low as 3.45, with a median of 4.83.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. BBSI has a P/S ratio of 0.72. This compares to its industry's average P/S of 0.83.

Finally, we should also recognize that BBSI has a P/CF ratio of 12.83. 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 16.67. Over the past year, BBSI's P/CF has been as high as 21.66 and as low as 10.03, with a median of 12.83.

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.


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