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Increased technology adoption and the success of the work-from-home trend are enabling the Zacks Business-Services industry to support a growing demand environment.
Prudent growth strategies, innovation and technology enhancements are helping Viad Corp, Bowman Consulting Group Ltd. and BGSF, Inc. to sail through the pandemic-related challenges.
About the Industry
The Zacks Business-Services industry comprises companies that offer a range of services, including specialty rental, supply-chain management, electronic commerce, technology, document management, digital audience, data, voice, analytical and business transformation, among others. The pandemic will continue to change the way industry players conduct business and deliver services.
The industry's key focus is currently on channelizing money and efforts toward more effective operational components, such as technology, digital transformation, data-driven decision-making and enhanced cybersecurity. To position themselves suitably in the post-pandemic era and better utilize the opportunities that the economic recovery will bring, service providers are increasing their efforts toward formulating and reassessing strategic initiatives.
What's Shaping the Future of the Business Services Industry?
Demand Stability: The industry is mature, with demand for services in good shape for a while now. Revenues, income and cash flows are now hovering above the pre-pandemic healthy levels, helping most industry players pay out stable dividends.
Relaxing Immigration Restrictions: Higher talent costs due to a competitive talent market, especially under the Trump-era restrictions on immigration, had been a headwind for the industry. However, President Joe Biden's moves to lift the Trump-era ban on legal immigration should help service providers thrive with the increased flow of foreign talent.
Certain Headwinds to Continue: With continued uncertainty in the economy, the industry is expected to see pricing, staffing and labor cost increases with no easy savings opportunities in supply chain operations through 2023.
Zacks Industry Rank Indicates Solid Near-Term Prospects
The Business-Services industry is housed within the broader Business Services sector. It carries a Zacks Industry Rank #62, which places it in the top 25% of more than 250 Zacks industries.
The group's Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Business Services industry has declined 27.1% compared with the S&P 500 composite's fall of 11.2%. The broader sector has declined 16.5% over the same time frame.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business-services stocks, the industry is currently trading at 18.03 compared with the S&P 500's 17.79 and the sector's 24.64.
Over the past five years, the industry has traded as high as 31.01X, as low as 10.88X and at the median of 18.03X.
3 Service Stocks to Bet On
We are presenting three stocks that are well poised to grow in the near term.
Bowman Consulting: This provider of real estate, energy, infrastructure, and environmental management solutions is currently witnessing growth across all its markets. Both the top and bottom lines are benefiting from strong organic and acquisitive growth.
The company carries a Zacks Rank #2 (Buy) and the Zacks Consensus Estimate for the 2023 EPS has remained unchanged at 77 cents in the past 60 days.
BGSF: This provider of workforce solutions and placement services carries a Zacks Rank #3 (Hold).
BGSF's Real Estate segment is benefiting from strong demand for apartments and build-to-rent single-family housing communities across North America. Its Professional segment is benefiting from strong activity in IT and Momentum Solutions.
The Zacks Consensus Estimate for the 2023 EPS has remained unchanged at $1.39 in the past 60 days.
Viad Corp: This experiential leisure travel, and live events and marketing services company also carries a Zacks Rank #3. The company is currently witnessing strong momentum across its business, driven mainly by the recovery of in-person event activity from the pandemic blues.
The Zacks Consensus Estimate for 2023's bottom line has remained unchanged at $1.28 in the past 60 days.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Viad, Bowman Consulting Group and BGSF
For Immediate Release
Chicago, IL – January 24, 2023 – Today, Zacks Equity Research discusses Viad Corp (VVI - Free Report) , Bowman Consulting Group Ltd. (BWMN - Free Report) and BGSF, Inc. (BGSF - Free Report) .
Industry: Business Services
Link: https://www.zacks.com/commentary/2042596/3-business-services-stocks-benefiting-from-a-prospering-industry
Increased technology adoption and the success of the work-from-home trend are enabling the Zacks Business-Services industry to support a growing demand environment.
Prudent growth strategies, innovation and technology enhancements are helping Viad Corp, Bowman Consulting Group Ltd. and BGSF, Inc. to sail through the pandemic-related challenges.
About the Industry
The Zacks Business-Services industry comprises companies that offer a range of services, including specialty rental, supply-chain management, electronic commerce, technology, document management, digital audience, data, voice, analytical and business transformation, among others. The pandemic will continue to change the way industry players conduct business and deliver services.
The industry's key focus is currently on channelizing money and efforts toward more effective operational components, such as technology, digital transformation, data-driven decision-making and enhanced cybersecurity. To position themselves suitably in the post-pandemic era and better utilize the opportunities that the economic recovery will bring, service providers are increasing their efforts toward formulating and reassessing strategic initiatives.
What's Shaping the Future of the Business Services Industry?
Demand Stability: The industry is mature, with demand for services in good shape for a while now. Revenues, income and cash flows are now hovering above the pre-pandemic healthy levels, helping most industry players pay out stable dividends.
Relaxing Immigration Restrictions: Higher talent costs due to a competitive talent market, especially under the Trump-era restrictions on immigration, had been a headwind for the industry. However, President Joe Biden's moves to lift the Trump-era ban on legal immigration should help service providers thrive with the increased flow of foreign talent.
Certain Headwinds to Continue: With continued uncertainty in the economy, the industry is expected to see pricing, staffing and labor cost increases with no easy savings opportunities in supply chain operations through 2023.
Zacks Industry Rank Indicates Solid Near-Term Prospects
The Business-Services industry is housed within the broader Business Services sector. It carries a Zacks Industry Rank #62, which places it in the top 25% of more than 250 Zacks industries.
The group's Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock-market performance and current valuation.
Industry's Price Performance
Over the past year, the Zacks Business Services industry has declined 27.1% compared with the S&P 500 composite's fall of 11.2%. The broader sector has declined 16.5% over the same time frame.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business-services stocks, the industry is currently trading at 18.03 compared with the S&P 500's 17.79 and the sector's 24.64.
Over the past five years, the industry has traded as high as 31.01X, as low as 10.88X and at the median of 18.03X.
3 Service Stocks to Bet On
We are presenting three stocks that are well poised to grow in the near term.
Bowman Consulting: This provider of real estate, energy, infrastructure, and environmental management solutions is currently witnessing growth across all its markets. Both the top and bottom lines are benefiting from strong organic and acquisitive growth.
The company carries a Zacks Rank #2 (Buy) and the Zacks Consensus Estimate for the 2023 EPS has remained unchanged at 77 cents in the past 60 days.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
BGSF: This provider of workforce solutions and placement services carries a Zacks Rank #3 (Hold).
BGSF's Real Estate segment is benefiting from strong demand for apartments and build-to-rent single-family housing communities across North America. Its Professional segment is benefiting from strong activity in IT and Momentum Solutions.
The Zacks Consensus Estimate for the 2023 EPS has remained unchanged at $1.39 in the past 60 days.
Viad Corp: This experiential leisure travel, and live events and marketing services company also carries a Zacks Rank #3. The company is currently witnessing strong momentum across its business, driven mainly by the recovery of in-person event activity from the pandemic blues.
The Zacks Consensus Estimate for 2023's bottom line has remained unchanged at $1.28 in the past 60 days.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.