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Barrett Business Services (BBSI)
NASDAQ:BBSI
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Barrett Business Services
(NASDAQ:BBSI)73Outperform
Positive Factors
Earnings Forecast
The earnings forecast for 2024 is being increased based on the earnings upside reported.
Financial Performance
The company's total revenue exceeded forecasts, increasing 8% year over year and 5% sequentially.
Market Expansion
The company expands in new geographies through its asset light model, with 20 new markets largely achieving management’s goals.
Negative Factors
Barrett Business Services (BBSI) vs. S&P 500 (SPY)
Market Cap
$1.01B
Dividend Yield0.77%
Average Volume (3M)112.69K
Price to Earnings (P/E)19.7
Beta (1Y)0.89
Revenue Growth7.03%
EPS Growth7.75%
CountryUS
Employees130,513
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)1.99
Shares Outstanding25,833,117
10 Day Avg. Volume154,441
30 Day Avg. Volume112,686
Financial Highlights & Ratios
PEG Ratio2.54
Price to Book (P/B)N/A
Price to Sales (P/S)0.91
Price to Cash Flow (P/CF)4.90
P/FCF Ratio5.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$45.00Price Target Upside15.38% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Barrett Business Services Business Overview & Revenue Model
Company DescriptionBarrett Business Services, Inc. (BBSI) is a prominent provider in the business management solutions sector, offering a range of services aimed at improving the operational efficiency and growth of small to medium-sized businesses. BBSI specializes in human resource outsourcing, risk management services, and business consulting, delivering strategic solutions that help businesses streamline their workforce management and enhance productivity.
How the Company Makes MoneyBBSI generates revenue primarily through its Professional Employer Organization (PEO) services, where it enters into co-employment agreements with client companies. This involves managing payroll, benefits, and human resources administration, for which BBSI charges a fee based on the payroll of the client's employees. Additional revenue streams include consulting fees from providing business management and operational support services. The company also leverages partnerships with insurance carriers to offer risk management and workers' compensation programs, which contribute to its earnings.
Barrett Business Services Financial Statement Overview
Summary
Barrett Business Services shows strong revenue growth and profitability with a stable balance sheet, reflected in an income statement score of 85 and a balance sheet score of 78. However, cash flow management is a concern with a score of 65, indicating negative free cash flow and challenges in cash conversion.Income Statement
Barrett Business Services showed strong income statement performance, with consistent revenue growth over recent years, including a 7.04% revenue growth in the latest year. The gross profit margin is healthy at 22.13%, and the net profit margin also stands robust at 4.63%. The company maintains solid EBIT and EBITDA margins at 5.22% and 6.84% respectively, indicating efficient cost management and profitability.85
Very Positive
Balance Sheet
The company's balance sheet reflects a stable financial position with a low debt-to-equity ratio of 0.10, suggesting minimal leverage and financial risk. Return on Equity (ROE) stands at a solid 23.93%, indicating efficient use of equity to generate profits. The equity ratio is moderate at 29.69%, showing a balanced capital structure.78
Positive
Cash Flow
Cash flow analysis shows mixed results. While the operating cash flow to net income ratio is low at 0.19, indicating potential issues in converting income into cash, the free cash flow situation is challenging with a negative free cash flow of -$4.07 million. This suggests that cash management could be improved to support business operations and growth.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.14B | 1.07B | 1.05B | 955.17M | 880.82M | Gross Profit |
| 253.25M | 242.53M | 234.84M | 204.51M | 182.91M | EBIT |
| 59.78M | 60.65M | 58.98M | 43.92M | 36.15M | EBITDA |
| 78.25M | 76.26M | 78.63M | 64.40M | 55.93M | Net Income Common Stockholders |
| 52.99M | 50.61M | 47.27M | 38.08M | 33.77M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 153.06M | 152.19M | 159.75M | 166.17M | 169.93M | Total Assets |
| 745.51M | 721.54M | 686.94M | 746.95M | 774.95M | Total Debt |
| 21.45M | 21.21M | 21.18M | 25.30M | 27.69M | Net Debt |
| -33.92M | -49.95M | -70.24M | -44.11M | -41.00M | Total Liabilities |
| 524.10M | 522.40M | 509.10M | 538.42M | 576.72M | Stockholders Equity |
| 221.40M | 199.14M | 177.84M | 208.53M | 198.24M |
| Cash Flow | Free Cash Flow | |||
| -4.07M | 55.40M | 11.80M | -22.26M | -36.52M | Operating Cash Flow |
| 10.09M | 67.22M | 27.78M | -15.46M | -27.91M | Investing Cash Flow |
| 38.78M | -55.19M | 61.15M | -112.86M | 4.14M | Financing Cash Flow |
| -41.13M | -44.57M | -60.18M | -26.89M | -15.73M |
Barrett Business Services Technical Analysis
Negative
39.00
Price Trends
42.44
Negative
41.34
Negative
37.85
Positive
Market Momentum
-0.86
Positive
25.95
Positive
29.47
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BBSI, the sentiment is Negative. The current price of 39 is below the 20-day moving average (MA) of 41.49, below the 50-day MA of 42.44, and above the 200-day MA of 37.85, indicating a neutral trend. The MACD of -0.86 indicates Positive momentum. The RSI at 25.95 is Positive, neither overbought nor oversold. The STOCH value of 29.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BBSI.
Barrett Business Services Risk Analysis
Barrett Business Services disclosed 37 risk factors in its most recent earnings report. Barrett Business Services reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Barrett Business Services Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $1.01B | 19.66 | 23.93% | 0.77% | 7.03% | 7.75% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
61 Neutral | $2.94B | 16.93 | 9.86% | ― | -7.88% | -14.39% | |
60 Neutral | $5.76B | 23.09 | 18.26% | 3.87% | -9.33% | -37.06% | |
58 Neutral | $2.69B | 19.18 | 6.83% | 5.35% | -5.61% | 77.92% | |
56 Neutral | $470.21M | 11.43 | -0.05% | 2.33% | -10.42% | -101.51% | |
44 Neutral | $186.57M | ― | -39.87% | ― | -17.78% | -820.48% |
* Industrials Sector Average
Performance Comparison
BBSI
Barrett Business Services
39.00
9.96
34.30%
KELYA
Kelly Services
12.94
-10.55
-44.91%
MAN
ManpowerGroup
57.35
-11.95
-17.24%
ASGN
ASGN
66.01
-32.91
-33.27%
RHI
Robert Half
54.98
-20.93
-27.57%
TBI
Trueblue
5.66
-5.70
-50.18%
Barrett Business Services Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -3.70% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
BBSI experienced strong financial performance in Q4 and 2024, with significant growth in gross billings, worksite employees, and client satisfaction. Successful strategic initiatives and expansions contributed to positive results. However, challenges remain in staffing revenues and regional growth in the Pacific Northwest. Overall, the highlights significantly outweigh the lowlights, indicating strong performance and future optimism.Highlights
Strong Financial Performance
Gross billings increased 10% year-over-year in Q4 to $2.25 billion and 7.9% for the full year to $8.3 billion. Diluted earnings per share increased 17% in Q4 to $0.63 and 7% for the full year to $1.98.
Record Worksite Employee Growth
Achieved a record number of worksite employees from new client additions in both Q4 and the full year, with a year-over-year increase of 5.2% in Q4.
Successful Expansion and Strategic Initiatives
Successfully expanded into new geographies with an asset-light model and operationalized strategic sales initiatives, resulting in greater sales velocity and record client retention.
BBSI Benefits Growth
Doubled the number of clients and participants in the BBSI Benefits plans, growing from 275 clients and 6,800 participants to 575 clients and 16,000 participants by the end of January.
Net Promoter Score Improvement
Net Promoter Score increased by 5 points to 69, indicating higher client satisfaction and value recognition.
IT Product Enhancements
Launched a new BBSI Applicant Tracking System and planning additional product launches to enhance the employee life cycle experience.
Lowlights
Staffing Revenue Decline
Staffing revenues declined 9% in Q4 and 7% for the year, though the rate of decline has slowed.
Pacific Northwest Growth Challenges
The Pacific Northwest region experienced a 4% decline in PEO gross billings, though trends have stabilized and growth is expected to return in 2025.
Workers' Compensation Pricing Pressure
Continued softness in workers' compensation pricing, though offset by savings in workers' compensation costs.
Company Guidance
During the conference call, BBSI provided a comprehensive overview of its financial and operational performance for the fourth quarter and the full year ending December 31, 2024. Key metrics highlighted include a 10% increase in gross billings for the quarter to $2.25 billion, with a 7.9% growth for the year, reaching $8.3 billion. The company also achieved a 5.2% growth in worksite employees and reported record client retention rates. BBSI's staffing business saw a decline of 9% in the quarter, but the company is forecasting modest growth in 2025. Net Promoter Score improved by 5 points to 69, reflecting high client satisfaction. Additionally, BBSI's strategic investment in technology and new product offerings contributed to its success, with the launch of a new Applicant Tracking System anticipated to further enhance client services in 2025. The company's financial outlook for 2025 projects a 7% to 9% growth in gross billings and a 4% to 6% increase in average worksite employees.Barrett Business Services Corporate Events
DividendsFinancial Disclosures
Barrett Business Services Reports Strong Q4 2024 Results
Positive
Feb 26, 2025
On February 26, 2025, Barrett Business Services announced a strong financial performance for the fourth quarter and full year of 2024, with a 10% increase in both revenue and gross billings in the fourth quarter, driven by new client additions and high client retention. The company also declared a regular quarterly cash dividend of $0.08 per share, payable on March 28, 2025, reflecting continued confidence in its growth trajectory and commitment to returning capital to shareholders.
Executive/Board Changes
Barrett Business Services Appoints Vice Chairman to Board
Positive
Dec 17, 2024
Barrett Business Services, Inc. announced the establishment of a vice chairman role on its board of directors, with Joseph S. Clabby appointed to the position, effective December 13, 2024. Clabby, a board member since 2022, will continue to serve on the Compensation and Nominating and Governance Committees. This move reflects the company’s board development and succession planning process, with Clabby’s extensive experience expected to contribute to BBSI’s growth and value creation.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.