Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Barrett Business Services (BBSI). BBSI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 15.53. This compares to its industry's average Forward P/E of 23.48. Over the past 52 weeks, BBSI's Forward P/E has been as high as 19.62 and as low as 10.05, with a median of 13.85.
Investors should also recognize that BBSI has a P/B ratio of 5.28. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. BBSI's current P/B looks attractive when compared to its industry's average P/B of 7.85. Over the past 12 months, BBSI's P/B has been as high as 8.39 and as low as 3.45, with a median of 4.83.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BBSI has a P/S ratio of 0.67. This compares to its industry's average P/S of 1.24.
Finally, investors should note that BBSI has a P/CF ratio of 12.89. 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 current P/CF looks attractive when compared to its industry's average P/CF of 18.11. Within the past 12 months, BBSI's P/CF has been as high as 22.52 and as low as 10.03, with a median of 12.84.
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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Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
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