Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Barrett Business Services (BBSI - Free Report) is a stock many investors are watching right now. BBSI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 14.97. This compares to its industry's average Forward P/E of 22.38. Over the last 12 months, BBSI's Forward P/E has been as high as 16.43 and as low as 10.05, with a median of 13.98.
We should also highlight that BBSI has a P/B ratio of 4.81. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 7.86. Within the past 52 weeks, BBSI's P/B has been as high as 5.75 and as low as 3.45, with a median of 4.71.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BBSI has a P/S ratio of 0.71. This compares to its industry's average P/S of 0.99.
Finally, investors will want to recognize that BBSI has a P/CF ratio of 13.35. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.46. Over the past 52 weeks, BBSI's P/CF has been as high as 15.66 and as low as 10.03, with a median of 12.72.
Value investors will likely look at more than just these metrics, but the above data helps show that Barrett Business Services is likely undervalued currently. And when considering the strength of its earnings outlook, BBSI sticks out at as one of the market's strongest value stocks.