Barrett Business Services Inc.
) reached a new 52-week high of $36.87 on Wednesday, Dec 12,
2012, beating its previous 52-week high of $36.05. The closing
price of this provider of business management solutions as on Dec
12, 2012, was $36.32, which represented a solid year-to-date
return of 100.1%. Average volume of shares traded over the last 3
months stands at approximately 42,653.
An impressive record of beating the quarterly earnings
expectations, a positive fiscal 2012 outlook, and a decent
dividend yield, are the major growth drivers for the shares of
Barrett Business Services.
With respect to earnings surprise, Barrett Business Services
has been beating the quarterly earnings expectations for the last
three years, most recently topping by 14.1% in its fiscal 2012
On Oct 23, 2012, Barrett Business Services reported
third-quarter earnings per share of 81 cents, ahead of the Zacks
Consensus Estimate of 71 cents. Moreover, it surged 50% from the
Revenues grew 30% year over year to $111.1 million, driven by
strong growth in the Professional Employer Organization (PEO)
client count and strong same-store sales growth. The company's
professional employer services and staffing services business
segments reported revenue growth of 40.5% and 4.6%,
Management acknowledged the solid client base and asserted
that client retention was strong. The company attributed the
solid results in the quarter to BBSI's maturing brand and strong
referral channels, which helped drive new clients along with its
ability to retain them.
In the fourth quarter, the company projects gross revenues of
between $585 million and $590 million, with earnings per share in
the range of 75 - 78 cents.
Barrett Business Services rewards its shareholders through
regular quarterly dividends and increasing the same. In November,
the company announced its fourth-quarter 2012 dividend of 13
cents per share, payable on Dec 14, 2012 to the shareholders of
record as on Nov 30, 2012 reflecting an increase of nearly 18%
from the dividend paid in the third quarter of 2012. This yields
a solid 1.43%, while the company has a payout ratio of 39%. We
believe that the company's continuous dividend payment and
increments reflects its earnings growth capacity and cash flow
Valuation is Attractive
Currently, Barrett Business Services trades at a forward P/E
of 23.28x, slightly above the peer group average of 21.77x.
Again, its price-to-book and price-to-sales ratios of 5.23 and
0.68 are at a premium to the peer group average of 2.55 and 0.62,
However, the company's trailing 12-month ROE of 20.0%, against
6.8% for the peer group, suggests that it actively and
efficiently reinvests its earnings compared to the peer group. In
addition, these compelling fundamentals are well supported by the
company's long-term estimated earnings growth rate of 35.0%
compared with 17.8% of the peer group.
The company's shares have been advancing since the beginning
of calendar year 2012, gaining a robust 100.1% year-to-date.
About The Company
Barrett Business Services has roughly 47 years of experience
in providing business management solutions. The company offers
staffing and professional employer organization services, which
help employers to manage employment-related issues efficiently
while reducing operational costs to a great extent. The host of
service offerings includes payroll processing, employee benefits
and administration, workers' compensation coverage, effective
risk management and workplace safety programs, and human resource
administration. The company has a market cap of approximately
Barrett Business Services, which competes with
), currently, holds Zacks #1Rank, implying a short-term Strong
Buy rating. We are also maintaining a long-term 'Outperform'
recommendation on the stock.
BARRETT BUS SVS (BBSI): Free Stock Analysis
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