Barrett Business Services Inc. ( BBSI ) posted first
quarter 2013 loss per share of 36 cents, narrower than the Zacks
Consensus Estimate of 38 cents loss per share.AUTOMATIC DATA (ADP): Free Stock Analysis
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Barrett reported net revenue of $111.6 million in the first
quarter, up 35.3% from $82.4 million a year ago. The year-over-year
increase was primarily attributable to the continued increase in
the company's client count and same-store sales.
Professional employer service fees grew 45.6% year over year to
$81.8 million. Revenues from Staffing Services were $29.7 million,
up 13.4% from the comparable quarter last year.
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 attract new clients and retain the existing
Reported gross profit was $8.3 million, up 26.8% year over year.
But gross margin fell 50 basis points to 7.5% from the year-ago
quarter. Total operating expenses in the first quarter were $12.3
million, up 21.4% from the year-earlier quarter. The increase in
operating expenses was due to 21.0% growth in selling, general
& administrative expenses and 32.2% growth in research and
Reported operating loss in the quarter was $4.0 million compared
to an operating loss of $3.6 million in the year-ago quarter.
Operating margin was (3.5%) compared to (4.3%) in the year-ago
Reported net loss was $2.5 million or 36 cents per share compared
to a net loss of $2.2 million or 22 cents in the comparable quarter
Barrett exited the quarter with cash, cash equivalents and
marketable securities of approximately $67.0 million, up from $62.5
million in the prior quarter. Long-term debt balance was
sequentially flat at $5.2 million.
For the second quarter of 2013, the company expects earnings per
share to range between 68 cents and 72 cents, up from 52 cents
reported in the year-ago quarter.
The Zacks Consensus Estimate for second quarter and fiscal 2013
are pegged at 69 cents and $2.21 per share, respectively.
Though Barrett registered a loss in its first quarter, the results
were better than the Zacks Consensus Estimate. Revenue growth was
encouraging given solid client growth. Management's commentary of
maintaining a strong business pipeline and a healthy client base is
encouraging. But the company's continued investments for
operational infrastructure improvements could jeopardize margins in
the near term.
Currently, Barrett has a Zacks Rank #2 (Buy). We would like to
recommend other technology stocks, which are really doing well. You
can consider Automatic Data Processing Inc. ( ADP ), Genpact
Ltd. ( G )
and Paychex Inc. ( PAYX ), which have a
Zacks Rank #2 (Buy) and are worth buying.