Barrett Business Services (NASDAQ:BBSI) shareholders have earned a 13% CAGR over the last five years

Barrett Business Services (NASDAQ:BBSI) shareholders have earned a 13% CAGR over the last five years

If you buy and hold a stock for many years, you’d hope to be making a profit. Furthermore, you’d generally like to see the share price rise faster than the market. But Barrett Business Services, Inc. (NASDAQ:BBSI) has fallen short of that second goal, with a share price rise of 73% over five years, which is below the market return. However, more recent buyers should be happy with the increase of 48% over the last year.

So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.

See our latest analysis for Barrett Business Services

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over half a decade, Barrett Business Services managed to grow its earnings per share at 4.5% a year. This EPS growth is slower than the share price growth of 12% per year, over the same period. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. And that’s hardly shocking given the track record of growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Barrett Business Services (NASDAQ:BBSI) shareholders have earned a 13% CAGR over the last five yearsBarrett Business Services (NASDAQ:BBSI) shareholders have earned a 13% CAGR over the last five years

earnings-per-share-growth

This free interactive report on Barrett Business Services’ earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Barrett Business Services, it has a TSR of 87% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

We’re pleased to report that Barrett Business Services shareholders have received a total shareholder return of 50% over one year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 13% per year), it would seem that the stock’s performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. If you would like to research Barrett Business Services in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

We will like Barrett Business Services better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.