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Barrett Business Services (BBSI)
NASDAQ:BBSI
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Barrett Business Services
(NASDAQ:BBSI)
Rating:75Outperform
Price Target:
$47.00
▲( 12.98% Upside)
Positive Factors
Analyst Rating
Analyst maintains an OUTPERFORM investment rating on BBSI shares with a 12-month price target of $45, suggesting a 14% upside.
Market Expansion
The company plans to open three new physical facilities in Chicago, Dallas, and Nashville, indicating growth and expansion.
Revenue Growth
The company reported Q1/25 total revenue of $292.6 million, exceeding the forecast by 3% and showing a 10% YOY increase.
Negative Factors
Earnings Forecast
Management maintained prior guidance for 2025, but economic headwinds led to a reduction in non-GAAP EPS forecasts for 2025 and 2026.
Barrett Business Services (BBSI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.09B
Dividend Yield0.74%
Average Volume (3M)172.43K
Price to Earnings (P/E)21.7
Beta (1Y)0.75
Revenue Growth8.41%
EPS Growth7.93%
CountryUS
Employees135,727
SectorIndustrials
Sector Strength90
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)-0.04
Shares Outstanding25,680,212
10 Day Avg. Volume171,519
30 Day Avg. Volume172,431
Financial Highlights & Ratios
PEG Ratio3.82
Price to Book (P/B)4.73
Price to Sales (P/S)0.00
P/FCF Ratio-255.04
Enterprise Value/Market Cap0.92
Enterprise Value/Revenue0.23
Enterprise Value/Gross Profit4.03
Enterprise Value/Ebitda3.58
Forecast
1Y Price Target
$45.67Price Target Upside9.78% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Barrett Business Services Business Overview & Revenue Model
Company DescriptionBarrett Business Services, Inc. provides business management solutions for small and mid-sized companies in the United States. The company develops a management platform that integrates a knowledge-based approach from the management consulting industry with tools from the human resource outsourcing industry. It offers professional employer services under which it enters into a client services agreement to establish a co-employment relationship with each client company, assuming responsibility for payroll, payroll taxes, workers' compensation coverage, and other administration functions for the client's existing workforce. The company also provides staffing and recruiting services, such as on-demand or short-term staffing assignment, contract staffing, direct placement, and long-term or indefinite-term on-site management services. It serves electronics manufacturers, light-manufacturing industries, agriculture-based companies, transportation and shipping enterprises, food processors, telecommunications companies, public utilities, general contractors in various construction-related fields, and professional services firms. The company was incorporated in 1965 and is headquartered in Vancouver, Washington.
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 healthy balance sheet featuring low leverage and high ROE. However, cash flow management presents concerns due to negative free cash flow, indicating a need for improved cash conversion processes.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
Positive
41.60
Price Trends
40.75
Positive
41.38
Positive
39.84
Positive
Market Momentum
0.45
Negative
52.97
Neutral
75.57
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BBSI, the sentiment is Positive. The current price of 41.6 is above the 20-day moving average (MA) of 41.34, above the 50-day MA of 40.75, and above the 200-day MA of 39.84, indicating a bullish trend. The MACD of 0.45 indicates Negative momentum. The RSI at 52.97 is Neutral, neither overbought nor oversold. The STOCH value of 75.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BBSI.
Barrett Business Services Risk Analysis
Barrett Business Services disclosed 40 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 3 New Risks
1.
Our business may be materially affected – either positively or negatively – by the emergence of disruptive new technologies or approaches enabled by the rapid pace of innovation unfolding in the artificial intelligence space. Q4, 2024
2.
Increasing regulatory focus on privacy and security issues and expanding laws and regulatory requirements could impact our business models and expose us to increased liability. Q4, 2024
3.
Our business depends on reliable access to labor, which may be affected by economic conditions, government policies, and public health crises. Q4, 2024
Barrett Business Services Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $3.55B | 14.77 | 13.92% | 2.30% | -3.27% | 62.57% | |
75 Outperform | $1.09B | 21.73 | 25.86% | 0.74% | 8.41% | 7.93% | |
69 Neutral | $4.18B | 25.80 | 162.14% | 1.20% | 1.50% | -44.95% | |
65 Neutral | $781.71M | 16.61 | 31.45% | 3.66% | -6.38% | -12.32% | |
64 Neutral | $4.46B | 11.94 | 5.17% | 249.36% | 4.00% | -12.35% | |
54 Neutral | $442.15M | 11.43 | -1.60% | 2.43% | -3.49% | -140.04% | |
53 Neutral | $2.69B | 43.20 | 48.65% | 3.38% | 1.90% | -60.33% |
* Industrials Sector Average
Performance Comparison
BBSI
Barrett Business Services
41.60
10.51
33.81%
NSP
Insperity
67.03
-33.29
-33.18%
KELYA
Kelly Services
11.86
-9.99
-45.72%
KFRC
Kforce
40.61
-19.74
-32.71%
KFY
Korn Ferry
67.85
3.77
5.88%
TNET
TriNet Group
83.11
-22.45
-21.27%
Barrett Business Services Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 2.04%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
BBSI experienced a strong start to the year with record revenue growth, new client additions, and successful product launches. However, challenges in staffing operations, macroeconomic uncertainties, and slower client hiring balanced the positive outcomes. The cautious outlook for the remainder of the year reflects these uncertainties.Q1-2025 Updates
Positive Updates
Record Start to 2025
BBSI had a record start to the year with new client sales, upselling of products, and great client retention exceeding revenue expectations.
Growth in Worksite Employees (WSEs)
A record number of worksite employees were added, with a 7.6% growth year-over-year, driven by a 55% increase in new client WSEs compared to the prior year.
Strong Billings and Regional Performance
Gross billings increased by 9.5% to $2.09 billion in Q1 2025. Notable regional growth included East Coast at 14% and Southern California at 11%.
Successful Launch of BBSI Benefits
The new health insurance offering has gained traction with approximately 640 clients and over 17,500 participants, expected to be accretive to earnings in 2025.
Positive Feedback on IT Investments
The launch of the BBSI Applicant Tracking System has received positive feedback for improving client efficiencies.
Negative Updates
Decline in Staffing Operations
The staffing business declined by 10% over the prior year quarter, with a slowdown in March below expectations.
Macroeconomic Uncertainty Impact
Trade negotiations and economic uncertainties are causing BBSI to maintain a cautious outlook for the remainder of 2025, despite a strong start.
Lower than Expected Hiring by Clients
Client hiring slowed down in March, below historical levels, impacting expected workforce growth.
Net Loss in Q1
A net loss per diluted share of $0.04 was recorded, compared to a net loss of $0.01 per diluted share in the previous year, attributed to seasonality and payroll tax expense.
Company Guidance
In the first quarter of fiscal year 2025, BBSI reported significant financial achievements, with gross billings increasing by 9.5% year-over-year to $2.09 billion, surpassing expectations. The company experienced a notable 7.6% growth in PEO worksite employees, driven by new client additions and strong client retention. Additionally, their new BBSI Benefits offering saw substantial uptake, with approximately 3,000 new participants and about 640 clients adopting various plans, totaling over 17,500 participants. Despite staffing revenue declining by 10%, the overall financial performance exceeded plans, and the company maintained its gross billings growth outlook of 7% to 9% for the year, reflecting caution due to economic uncertainties. BBSI also highlighted the success of their new asset-light market expansion model, resulting in the addition of over 600 new worksite employees and plans for new physical locations in Chicago, Dallas, and Nashville by the third quarter.Barrett Business Services Corporate Events
DividendsFinancial Disclosures
Barrett Business Services Announces Quarterly Dividend
Positive
May 7, 2025
On May 7, 2025, Barrett Business Services, Inc. (BBSI) announced a quarterly cash dividend of $0.08 per share, payable on June 6, 2025. The company reported strong financial results for the first quarter of 2025, with revenues increasing by 10% to $292.6 million and gross billings rising by 9% to $2.09 billion. Despite a net loss of $1.0 million, BBSI experienced record gross and net worksite employee additions and maintained high client retention. The company remains optimistic about navigating macroeconomic uncertainties and continues to focus on sustainable growth and long-term value.
Executive/Board Changes
Barrett Business Services Appoints New Board Member
Positive
Apr 7, 2025
On April 7, 2025, Barrett Business Services, Inc. appointed Mark S. Finn to its Board of Directors, with his tenure effective immediately. Finn, who has an extensive background in finance from his 30-year career at T. Rowe Price Group, is expected to bring valuable strategic insights to BBSI as it navigates its next phase of growth and innovation. His appointment is seen as a positive step towards strengthening the company’s leadership and ensuring long-term success.
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.
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.