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Should Value Investors Buy Barrett Business Services (BBSI) Stock?

·4 min read

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Barrett Business Services (BBSI) is a stock many investors are watching right now. BBSI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.47, which compares to its industry's average of 25.46. Over the past year, BBSI's Forward P/E has been as high as 17.72 and as low as -150.87, with a median of 13.80.

We also note that BBSI holds a PEG ratio of 0.83. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BBSI's industry currently sports an average PEG of 2.41. Over the last 12 months, BBSI's PEG has been as high as 1.48 and as low as -12.57, with a median of 1.15.

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 0.58. This compares to its industry's average P/S of 1.05.

Finally, our model also underscores that BBSI has a P/CF ratio of 12.44. 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. This stock's P/CF looks attractive against its industry's average P/CF of 17.67. BBSI's P/CF has been as high as 16.24 and as low as 10.22, with a median of 12.45, all within the past year.

Hudson Global (HSON) may be another strong Outsourcing stock to add to your shortlist. HSON is a # 2 (Buy) stock with a Value grade of A.

Hudson Global is trading at a forward earnings multiple of 8.07 at the moment, with a PEG ratio of 0.40. This compares to its industry's average P/E of 25.46 and average PEG ratio of 2.41.

HSON's price-to-earnings ratio has been as high as 31.64 and as low as 7.82, with a median of 13.50, while its PEG ratio has been as high as 1.58 and as low as 0.39, with a median of 0.62, all within the past year.

Hudson Global also has a P/B ratio of 1.90 compared to its industry's price-to-book ratio of 13.01. Over the past year, its P/B ratio has been as high as 2.80, as low as 1.15, with a median of 2.02.

Value investors will likely look at more than just these metrics, but the above data helps show that Barrett Business Services and Hudson Global are likely undervalued currently. And when considering the strength of its earnings outlook, BBSI and HSON sticks out as one of the market's strongest value stocks.

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Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report
Hudson Global, Inc. (HSON) : Free Stock Analysis Report
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