Are Investors Undervaluing Barrett Business Services (BBSI) Right Now?
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality 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) and an A for Value. The stock is trading with a P/E ratio of 12.12, which compares to its industry's average of 21.17. Over the last 12 months, BBSI's Forward P/E has been as high as 15.71 and as low as 5.28, with a median of 13.19.
Investors should also note that BBSI holds a PEG ratio of 1.01. 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 has an average PEG of 1.98 right now. BBSI's PEG has been as high as 1.25 and as low as 0.38, with a median of 1.03, all within the past year.
Another notable valuation metric for BBSI is its P/B ratio of 2.47. The P/B is a method of comparing a stock's market value to 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 7.06. Over the past 12 months, BBSI's P/B has been as high as 4.85 and as low as 1.27, with a median of 3.51.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BBSI has a P/S ratio of 0.48. This compares to its industry's average P/S of 0.75.
Finally, investors should note that BBSI has a P/CF ratio of 9.11. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BBSI's current P/CF looks attractive when compared to its industry's average P/CF of 10.12. BBSI's P/CF has been as high as 13.49 and as low as 4.30, with a median of 11.30, all within the past year.
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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