Barrett Business Services (NASDAQ: BBSI) provides
a range of human resource management services to small and medium-sized U.S. businesses. The company offers both temporary and long-term staffing to some 2,300 clients, focusing on light industrial, clerical, and technical specialties. It also outsources such human resource services as payroll management, benefits administration and recruiting to about 1,200 clients. Barrett operates primarily on the coasts, through a total of 45 offices.
The company pleased investors last week, when it reported Q2 EPS of 29 cents and revenues of $269.4 million. Analysts had been expecting 22 cents and $264.2 million. Management also guided Q3 EPS to 34-36 cents (28 cent consensus) and Q3 revenues to $277-$282 million ($269.32M consensus). Roth Capital subsequently upgraded BBSI to "buy" status.
The shares
popped on the news and have since moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers now recommend the issue with one "strong buy", one "buy" and three "holds". Analysts see a 20% average annual growth rate, through the next five years. The BBSI P/E ratio (13.02), Price to Sales ratio (0.63), Price to Book ratio (1.68), Price to Free Cash Flow ratio (26.71), Return on Assets (8.86%) and Return on Investment (12.73%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 58% of the outstanding shares. Over the past 52 weeks, the stock has traded between $10.38 and $26.73. A stop-loss of $14.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.
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