NEW YORK ( TheStreet) -- Barrett Business Services (Nasdaq: BBSI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, increase in net income, notable return on equity and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins.
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- The revenue growth greatly exceeded the industry average of 15.8%. Since the same quarter one year prior, revenues rose by 25.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 55.88% and other important driving factors, this stock has surged by 58.44% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BBSI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Professional Services industry and the overall market, BARRETT BUSINESS SVCS INC's return on equity exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Professional Services industry average. The net income increased by 8.5% when compared to the same quarter one year prior, going from $3.45 million to $3.74 million.
- BARRETT BUSINESS SVCS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BARRETT BUSINESS SVCS INC increased its bottom line by earning $1.41 versus $0.72 in the prior year. For the next year, the market is expecting a contraction of 6.4% in earnings ($1.32 versus $1.41).
-- Written by a member of TheStreet Ratings Staff