Last update on 2024-06-07

Barrett Business Services (BBSI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Analyze Barrett Business Services (BBSI) using Piotroski F-Score, scoring 8/9. Discover financial health via key metrics like profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 8

We're running Barrett Business Services (BBSI) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Barrett Business Services (BBSI) has a Piotroski F-Score of 8 out of 9. A Piotroski Score is a measure to rank stocks based on their financial strength, using nine criteria focused on profitability, liquidity, and operating efficiency. BBSI reports a positive net income, strong operational cash flow, and an improving asset turnover ratio, indicating effective management and profitability. Although there was a slight increase in leverage and a minor dip in the current ratio that weakens short-term financial health, BBSI's overall performance is quite strong. The company also showed improvements in its gross margin and a decrease in outstanding shares, enhancing shareholder value.

Insights for Value Investors Seeking Stable Income

With a high Piotroski F-Score of 8, Barrett Business Services (BBSI) shows strong financial health and effective management. This makes it an attractive stock for investors looking for robust and undervalued opportunities. However, prospective investors should remain cautious about the slight rise in leverage and declining current ratio. Overall, it's worth considering BBSI for investment but monitoring these aspects is essential to mitigate financial risks.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Barrett Business Services (BBSI)

Company has a positive net income?

Net Income is the measure of a company's profitability. It is important to check if the net income is positive or negative.

Barrett Business Services (BBSI) has reported a net income of $50,612,000 for the year 2023. This is a positive net income, and according to the Piotroski F-Score criterion, a positive net income adds 1 point towards the company's overall score. Further analysis of the historical net income data reveals that BBSI has consistently reported positive net income over the past 20 years, except for the years 2009 and 2014, where they reported losses of $4,768,000 and $27,084,000, respectively. The steady growth in net income in recent years is a positive trend. From 2003 to 2023, BBSI's net income has grown significantly from $2,085,000 in 2003 to $50,612,000 in 2023. This upward trajectory is favorable and suggests effective management and profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the cash inflows and outflows from a company's core business operations.

For Barrett Business Services (BBSI), the CFO in 2023 is $67,222,000, which is positive. This positive cash flow is indicative of healthy operations and suggests that the company is generating enough cash to sustain and grow its business. Moreover, analyzing the historical CFO data over the past 20 years, we observe fluctuations, with significant increases aligning with strong operational performance in years like 2017 and 2015. Despite a few negative years (notably in 2020 with -$27,915,000), the overall trend showcases recovery and consistent positive cash flow in recent years, underscoring strong financial health. Therefore, BBSI earns 1 point for this criterion.

Return on Assets (ROA) are growing?

Explain the criterion for Barrett Business Services (BBSI) and why it is important to consider

The Return on Assets (ROA) metric evaluates how efficiently Barrett Business Services (BBSI) uses its assets to generate profit. An increasing ROA signifies better asset efficiency.

Operating Cashflow are higher than Netincome?

Compare Operating Cash Flow with Net Income. Operating Cash Flow higher than Net Income means more cash generation from operations than profits reported.

For 2023, Barrett Business Services (BBSI) reported an Operating Cash Flow of $67,222,000, which is higher than its Net Income of $50,612,000. This results in added 1 point because it indicates a robust cash-generating capability. This is a positive sign, showing that the company generates more cash from its operations than its accounting profits. The historical data reveals fluctuations in both metrics, with significant dips during 2020 and 2021. Nonetheless, BBSI's return to a higher operating cash flow compared to net income in 2023 reflects effective operational management and financial health.

Liquidity of Barrett Business Services (BBSI)

Leverage is declining?

Change in leverage is the difference in a company's debt levels from one year to the next. Lower leverage often indicates reduced financial risk.

Barrett Business Services (BBSI) saw an increase in leverage from 0.0207 in 2022 to 0.0202 in 2023. This trend is unfavorable for this Piotroski criterion, given that increased leverage often signifies heightened financial risk. With a 20-year leverage history, BBSI showed variability, peaking at 0.0442 in 2014, but in general maintaining relatively low debt levels. Given the recent increase, it doesn't earn a point in this analysis section, suggesting a potential need for scrutiny regarding financial stability.

Current Ratio is growing?

Current Ratio measures a company's ability to pay off its current liabilities with its current assets. It is important as it indicates the liquidity position of the company.

The Current Ratio for Barrett Business Services (BBSI) decreased from 1.3574 in 2022 to 1.3037 in 2023. This leads to a decrease of 0.0537. Given that a higher Current Ratio generally indicates a stronger liquidity position, the decrease in 2023 suggests a slight weakening in short-term financial health. It is important to note, however, that despite the decrease, BBSI's Current Ratio remains close to the Industry Median of 1.3723.

Number of shares not diluted?

Changes in outstanding shares offer insights into a company's capital structure movements.

The outstanding shares for Barrett Business Services (BBSI) decreased from 7,130,000 in 2022 to 6,731,000 in 2023. This change signifies a reduction of nearly 5.6% in outstanding shares, adding 1 point to the company's Piotroski Score. This is positive, indicating potential buybacks and a shareholder-friendly approach, which often leads to higher EPS and better returns.

Operating of Barrett Business Services (BBSI)

Cross Margin is growing?

The criterion assesses the company's ability to maintain or improve its gross margin year-over-year, highlighting its cost management and pricing power.

Barrett Business Services (BBSI) has shown an improvement in its gross margin, increasing from 0.2227 in 2022 to 0.2268 in 2023. This is a positive trend, indicating that the company has been able to manage its cost of goods sold more efficiently or has improved its pricing strategy. Despite this improvement, when compared to the industry median gross margin, BBSI’s margin remains significantly lower. The industry’s median gross margin was at 0.3223 in 2023. Historically, BBSI's gross margin has fluctuated, peaking notably in 2006 at 0.2143 and dropping significantly during 2008 and 2009 during the financial crisis period, before stabilizing in recent years. This incremental improvement is promising, but continuous efforts will be needed for Barrett Business Services to bridge the gap between its performance and the industry standard.

Asset Turnover Ratio is growing?

The change in asset turnover ratio compares the efficiency of a company's use of its assets to generate sales year over year. An increasing asset turnover is a positive trend.

Barrett Business Services (BBSI) experienced an increase in its asset turnover ratio from 1.4706 in 2022 to 1.5184 in 2023, indicating improved efficiency in using its assets. This marks an improvement and adds 1 point under the Piotroski criteria. Analyzing the historical data, BBSI's asset turnover has shown fluctuation over the past 20 years, with a marked decline from 2.407 in 2003 to a low of 1.0769 in 2022 before rebounding slightly in more recent years.