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Dr. Paul Price
Dr. Paul Price
Articles (513)  | Author's Website |

'TrueBlue' looks good on you -- TrueBlue Inc.

December 26, 2007 | About:

TrueBlue Inc. [NYSE] TBI 12/24/07 close: $15.25

52 week range: $14.22 - $28.63

TrueBlue [formerly named Labor Ready] owns various temporary help agencies that provide workers [for Light Industrial purposes] as well as skilled tradesmen. They cater to small and mid-sized businesses rather than giant companies.

Earnings grew nicely from 2001 through 2006 climbing from $0.23/sh. to $1.45/sh. over those 5 years as net profit margins expanded from 1.0% to 5.7% on an overall revenue increase of 47%. Through three quarters of 2007 EPS were up 9.7% year-over-year on just a 2% sales increase.

A pre-announced shortfall for the fourth quarter sent TBI shares tumbling down from a July high of $28.63 to today's $15.25. The newly revised concensus outlook for the full year 2007 is now $1.46 versus last year's record of $1.45 - not exactly a disaster. The current view for the year ahead is for moderately growing earnings of $1.54 /share.

Thus, TBI now trades at 10.5X 2007's and just 9.9X 2008's forward earnings.

TrueBlue had zero debt and held $66.6 MM cash at the end of September.

These shares have generally traded at 18X - 22X earnings during the past 10 years. Even a 16X mulitple on next year's estimates would lead to a rebound to around $25.40 - up more than 66% from the current quote.

Is that an attainable price? TBI [formerly LRW] hit $26.50, $27.75 and $28.63 during each of the past three calendar years.

Risk? The absolute low prices [touched only briefly] in the past three years were: $15.14, $14.94 and $14.22.

How many stocks do you follow that are debt-free, under 10X projected earnings and have 50% - 75% upside?

About the author:

Dr. Paul Price


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Rating: 2.5/5 (6 votes)


Htyen1 - 9 years ago    Report SPAM
i have been looking at this for a while, i was wondering if you have any insight on the competitive advantage of this business on a local scale, meaning couldn't anyone start this business within a local area? i understand tbi has some advantage from a national scale of those companies that are looking for worker on a national level.

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