Shareholders of CBIZ would probably like to forget the past six months even happened. The stock dropped 41.8% and now trades at $30.28. This may have investors wondering how to approach the situation.
Given the weaker price action, is now a good time to buy CBZ? Find out in our full research report, it’s free.
Why Is CBIZ a Good Business?
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE: CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, CBIZ’s sales grew at an incredible 22.9% compounded annual growth rate over the last five years. Its growth beat the average business services company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
CBIZ’s EPS grew at an astounding 17.6% compounded annual growth rate over the last five years. This performance was better than most business services businesses.
3. Solid Free Cash Flow Margin Provides Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
CBIZ has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 7% over the last five years, slightly better than the broader business services sector.
Final Judgment
These are just a few reasons why we think CBIZ is one of the best business services companies out there. After the recent drawdown, the stock trades at 7.4× forward P/E (or $30.28 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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