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Category: Stock Market and Barrett Business Services
Date: 7 November 2019 Stock Price: $93.75 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of Barrett Business Services Inc, a company that provides business management solutions including human resource outsourcing and management consulting services
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About Barrett Business Services Inc.
BBSI (NASDAQ: BBSI) is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create a unique operational platform that differentiates it from competitors. The Company’s integrated platform is built upon expertise in payroll processing, employee benefits, workers’ compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI’s partnerships help businesses of all sizes improve the efficiency of their operations. The Company works with more than 6,400 clients across all lines of business in 23 states.
The image below show BBSI's current market as well as potential market for it to tap into
The image below show BBSI's current market as well as potential market for it to tap into
Barrett Business Services market and potential untapped market
Overview of Barrett Business Services' 3rd quarter 2019 earnings report
The data below refers to the most recent quarter unless specified otherwise
- Total revenue: $247.962 million (up from $247.287 million from the same quarter of the previous year)
- Revenues increased by 0.27% over the last 12 months
- Total cost of revenues: $177.198 million (down from $187.602 million for the same quarter of the previous year)
- Cost of revenues decreased by -5.5% over the last 12 months
- Net income: $24.971 million (up from $19.087 million for the same quarter of the previous year)
- Diluted earnings per share: $3.24 (up from $2.50 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 7.711 million (up from 7.643 million for the same quarter of the previous year)
- Cash and cash equivalents: $35.452 million
- Cash and cash equivalents per share: $4.59
- Cash and cash equivalents makes up 4.9% of Barrett Business Services' market capital
- Cash and cash equivalents makes up 4.1% of Barrett Business Services' total assets
- Accounts receivable: $187.4675 million
- Accounts receivable makes up 21.5% of the Barrett Business Services' total assets.
- Stockholders equity for Barrett Business Services: $160.171 million
- Stockholders equity per share: $20.77
- Barrett Business Services is trading at 4.5 times its stockholders equity which is outside the excepted range of between 2 and 4 times that most firms tend to trade at.
Barrett's management commentary on their 3rd quarter 2019 earnings and guidance
VANCOUVER, Wash., Nov. 05, 2019 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the third quarter ended September 30, 2019.
“We reported strong results in the quarter, driven by the addition of 386 clients,” said BBSI President and CEO Mike Elich. “We continue to see the results from various structural moves we have been working on over the past several years, which gives us confidence in a strong long-term financial outlook.”
Third Quarter 2019 Financial Summary vs. Year-Ago Quarter
“We reported strong results in the quarter, driven by the addition of 386 clients,” said BBSI President and CEO Mike Elich. “We continue to see the results from various structural moves we have been working on over the past several years, which gives us confidence in a strong long-term financial outlook.”
Third Quarter 2019 Financial Summary vs. Year-Ago Quarter
- Net revenues increased to $248.0 million versus $247.3 million.
- Gross billings up 7% to $1.55 billion.
- Net income up 31% to $25.0 million.
- Diluted earnings per share up 30% to $3.24
Outlook
For the full year 2019, BBSI is raising the estimate for expected diluted earnings per share by 12% to $6.05 (from $5.40) compared to $4.98 per diluted share in 2018. This continues to assume an effective tax rate of approximately 22%. BBSI expects the range for workers’ compensation expense as a percentage of gross billings to be 4.3% to 4.5% in the fourth quarter of 2019. This range can also be applied as an approximation for 2020. BBSI also continues to expect gross billings to increase approximately 8% for the next rolling 12-month period
For the full year 2019, BBSI is raising the estimate for expected diluted earnings per share by 12% to $6.05 (from $5.40) compared to $4.98 per diluted share in 2018. This continues to assume an effective tax rate of approximately 22%. BBSI expects the range for workers’ compensation expense as a percentage of gross billings to be 4.3% to 4.5% in the fourth quarter of 2019. This range can also be applied as an approximation for 2020. BBSI also continues to expect gross billings to increase approximately 8% for the next rolling 12-month period
Barret Business Services (NASDAQ: BBSI) stock price history
The image below, obtained from Google, shows the stock price history of Barrett Business Services (NASDAQ:BBSI) for the last 5 years. And its been a very good time for Barrett Business Services stockholders. 5 years ago Barrett Business Services stock was trading at around $25.30 a stock and its currently trading at $93.75. That's a very healthy return of 270% provided to Barrett Business Services stock holders over the last 5 years.
Barrett Business Services is also trading at a lot closer to its 52 week high of $95.64 than it is to its 52 week low of $53.10 which is a clear indication that the short term sentiment and momentum of Barrett Business Services stock is very positive.
Barrett Business Services is also trading at a lot closer to its 52 week high of $95.64 than it is to its 52 week low of $53.10 which is a clear indication that the short term sentiment and momentum of Barrett Business Services stock is very positive.
Barrett Business Services (NASDAQ: BBSI) stock price history over the last 5 years.
Recent coverage of Barrett Business Services
The extract below shows recent coverage of Barrett Business Services as obtained from TheStreet.com
VANCOUVER, Wash., Oct. 23, 2019 (GLOBE NEWSWIRE) -- The board of directors of Barrett Business Services, Inc. (BBSI) (NASDAQ: BBSI), a leading provider of business management solutions, has appointed Diane L. Dewbrey as a director effective October 17, 2019. Her appointment expands the board to eight members. Currently, Ms. Dewbrey serves as a director of MBIA Inc. MBIA Inc. is headquartered in Purchase, New York, and is a holding company whose subsidiaries provide financial guarantee insurance for the public and structured finance markets. Ms. Dewbrey serves on the Finance, Audit, and Compensation and Governance Committees of MBIA. Previously, from 2009 until its merger with Consolidated Communications Holdings, Inc., in 2014, Ms. Dewbrey served as an independent director and then Chair (2013-14) of the Board of Enventis Corporation, a telecommunications company. "We are very pleased that Diane has accepted our invitation to join the BBSI Board," said Anthony Meeker, Chairman of the BBSI Board of Directors. "Diane has been consistently recognized for her board leadership and contributions in community organizations. Additionally, we are confident that her knowledge of and experience in the financial services industry will contribute to our efforts to enhance BBSI's shareholder value." Ms. Dewbrey commented, "Given my career history with small and mid-sized business owners, I have actual experiences that are very relevant, and will benefit the long-term strategy for the organization
VANCOUVER, Wash., Oct. 23, 2019 (GLOBE NEWSWIRE) -- The board of directors of Barrett Business Services, Inc. (BBSI) (NASDAQ: BBSI), a leading provider of business management solutions, has appointed Diane L. Dewbrey as a director effective October 17, 2019. Her appointment expands the board to eight members. Currently, Ms. Dewbrey serves as a director of MBIA Inc. MBIA Inc. is headquartered in Purchase, New York, and is a holding company whose subsidiaries provide financial guarantee insurance for the public and structured finance markets. Ms. Dewbrey serves on the Finance, Audit, and Compensation and Governance Committees of MBIA. Previously, from 2009 until its merger with Consolidated Communications Holdings, Inc., in 2014, Ms. Dewbrey served as an independent director and then Chair (2013-14) of the Board of Enventis Corporation, a telecommunications company. "We are very pleased that Diane has accepted our invitation to join the BBSI Board," said Anthony Meeker, Chairman of the BBSI Board of Directors. "Diane has been consistently recognized for her board leadership and contributions in community organizations. Additionally, we are confident that her knowledge of and experience in the financial services industry will contribute to our efforts to enhance BBSI's shareholder value." Ms. Dewbrey commented, "Given my career history with small and mid-sized business owners, I have actual experiences that are very relevant, and will benefit the long-term strategy for the organization
Barrett Business Services (NASDAQ: BBSI) latest stock valuation
So based on Barrett Business Services latest earnings report and their fiscal guidance provided what do we value Barrett Business Services' stock at? Based on their earnings reported and fiscal guidance provided our valuation model provides a target (full value) price for Barrett Business Services at $101.50 per stock
We therefore believe that the stock of Barrett Business Services is undervalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $101.50. A good entry price into Barrett Business Services would therefore be at $91.40 or below. We expect the stock price of Barrett Business Services to kick up from current levels to levels closer to our target (full value) price in coming weeks and months.
We therefore believe that the stock of Barrett Business Services is undervalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $101.50. A good entry price into Barrett Business Services would therefore be at $91.40 or below. We expect the stock price of Barrett Business Services to kick up from current levels to levels closer to our target (full value) price in coming weeks and months.
Next earnings release of Barrett Business Services
It is expected that Barrett Business Services will release their 4th quarter and full fiscal 2019 results in early February 2020