Are Investors Undervaluing Barrett Business Services (BBSI) Right Now?
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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 holds a P/E ratio of 11.60, while its industry has an average P/E of 18.44. BBSI's Forward P/E has been as high as 14.23 and as low as 10.64, with a median of 12.21, all within the past year.
We also note that BBSI holds a PEG ratio of 0.83. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BBSI's industry currently sports an average PEG of 1.85. BBSI's PEG has been as high as 1.02 and as low as 0.74, with a median of 0.87, all within the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BBSI has a P/S ratio of 0.55. This compares to its industry's average P/S of 1.14.
Finally, we should also recognize that BBSI has a P/CF ratio of 11.26. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. BBSI's P/CF compares to its industry's average P/CF of 15.11. Within the past 12 months, BBSI's P/CF has been as high as 13.56 and as low as 10.11, with a median of 11.80.
Another great Outsourcing stock you could consider is Cap Gemini (CGEMY), which is a # 2 (Buy) stock with a Value Score of A.
Shares of Cap Gemini are currently trading at a forward earnings multiple of 14.61 and a PEG ratio of 1.69 compared to its industry's P/E and PEG ratios of 18.44 and 1.85, respectively.
Over the past year, CGEMY's P/E has been as high as 18.65, as low as 12.85, with a median of 15.41; its PEG ratio has been as high as 1.88, as low as 1.12, with a median of 0.87 during the same time period.
Additionally, Cap Gemini has a P/B ratio of 3.15 while its industry's price-to-book ratio sits at 12.19. For CGEMY, this valuation metric has been as high as 3.55, as low as 2.69, with a median of 3.12 over the past year.
These are only a few of the key metrics included in Barrett Business Services and Cap Gemini strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, BBSI and CGEMY look like an impressive value stock at the moment.
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Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
Cap Gemini SA (CGEMY) : Free Stock Analysis Report
