NEW YORK ( TheStreet) -- Barrett Business Services (Nasdaq: BBSI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.0%. Since the same quarter one year prior, revenues rose by 19.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, BBSI's share price has jumped by 29.10%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- BBSI's debt-to-equity ratio of 0.87 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.14 is sturdy.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Professional Services industry. The net income has significantly decreased by 139.9% when compared to the same quarter one year ago, falling from $5.55 million to -$2.21 million.
- The gross profit margin for BARRETT BUSINESS SVCS INC is currently extremely low, coming in at 8.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.70% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff