On January 3, 2013, Zacks Investment Research upgraded
Barrett Business Services Inc.
) to a Zacks #1 Rank (Strong Buy).
With a solid return of 99.8% over the past year and positive
estimate revisions, this provider of business management
solutions is an attractive investment opportunity.
Why the Upgrade?
An upbeat third quarter 2012 and increase in dividend per share
have contributed to the upgrade.
After delivering solid third quarter results, Barrett announced
an 18.0% increase in its dividend (from 11 cents per share to 13
cents). The increase was the reflection of the company's strength
in earnings and cash flow generation.
Barrett reported third quarter earnings per share of 81 cents,
ahead of the Zacks Consensus Estimate of 71 cents and up 50% from
the year-ago quarter.
Revenues grew 30% year over year to $111.1 million, driven by
strong growth in 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%, respectively.
Management acknowledged the solid client base and asserted that
client retention was strong.
Each of the 2 estimates for 2012 and 2013 were raised over the
last 60 days.
Despite the positive estimate revisions, the Zacks Consensus
Estimate for 2012 remained unchanged at $1.67 with the Zacks
Consensus Estimate for 2013 moving up 4 cents (1.9%) to $2.17.
Barrett has the potential to post a positive earnings surprise in
the upcoming quarter. For the past four quarters, the company has
posted an average surprise of 10.5%.
Other Stocks to Consider:
Business management solutions providers
Broadridge Financial Solutions Inc.
) also have a Zacks #1 Rank (Strong Buy).
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