This company has intrigued me for some time. It targets small to medium businesses in mostly the western USA, offering professional employer organization services in the areas of payroll and payroll taxes, employee benefits, health insurance, workers' compensation coverage, workplace safety programs, compliance with federal and state employment laws, labor and workplace regulatory requirements, and related administrative responsibilities. Many of these businesses are finding it makes economic sense to outsource these complex tasks to specialist firms like BBSI.
The company's financials speak for themselves:
- P/E 10
- PEG 0.8
- P/S 0.68
- EV/EBITDA <>2
Despite the perception of a negative economic outlook in the US, quarterly earnings growth is approx 13%.
Other points:
- trading just above 52 week low
- >30% insider ownership, particularly the CEO
- Very strong management both qualitatively and quantitatively. CEO is highly respected, contrarian reprobate. I haven't met him but I like him because in the last conference call he told the analysts that if they keep selling the stock down to 5 x earnings he'd buy the whole f#$#ing company. ;-) ROE 17%
- long term demographic appeal- is helping match aging baby boomers to temp and part time positions for growing companies desperate for warm bodies.
- Guru Robert Olstein has a significant position, adding to it in Sept at a much higher price than trading currently
- A dividend! (1.9% currently with a sustainable payout ratio too)
Main bear case:
- actual or perceived tough economic times and tightening job market looks likely over the short term. This may push stock price down further over the short term. I think that these worries are priced into the stock now.
- does not have a global footprint
- is a microcap and subject to ++ volatility
I intend to study this one carefully and obtain a position within the next 2 months.
l
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