U.S. small cap business services stock has strong earnings growth, earnings yield

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Barrett Business Services Inc. is a small-cap company which provides business management solutions, combining human resource outsourcing and professional management consulting. It has expertise in payroll processing, employee benefits, workers' compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI works with more than 3,400 clients across all lines of business in 23 states. It has a market cap of $300-million (U.S.).

BBSI has grown EPS at a 30-per-cent clip over the long term (using avg of 3, 4 and 5yr EPS growth rates), part of why it gets strong interest from Peter Lynch model. The Lynch model also likes its 0.47 P/E-to-growth ratio.

It has grown revenues at a 24-per-cent clip over the long term (using avg of 3, 4 and 5yr sales growth rates), and trades for 14x EPS.

The company has a 51-per-cent return on equity. It has a 92 relative strength over past 12 months.

BBSI's stellar 51-per-cent return on capital (EBIT/total capital employed) and 12.5-per-cent earnings yield (EBIT/enterprise value) have earned it strong interest from the Joel Greenblatt-based model.

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