On Tuesday, BMO Capital Markets adjusted its outlook on TrueBlue Inc . (NYSE:TBI) shares, a staffing services company, by reducing the price target from $11.00 to $10.00. The firm maintained an Outperform rating on the stock, indicating a belief in the company's potential to perform well relative to its peers.
The decision to lower the price target came after TrueBlue reported its latest quarterly results, which, despite industry headwinds, were better than expected. This performance was attributed to the company's effective cost containment strategies. Revenue declines were at the lower end of the company's guidance, with the PeopleReady segment experiencing more pronounced negative trends, while the other two segments fared slightly better.
TrueBlue's guidance for the fourth quarter of 2024 suggests that revenue declines and adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) could surpass the midpoint of market expectations. In response to these projections and the current industry environment, BMO Capital has conservatively revised its estimates for TrueBlue.
Despite the lowered price target, BMO Capital's analyst expressed a continued positive outlook for TrueBlue, stating, "We still believe TBI can outperform the group when (if?) the sector rebounds." This suggests confidence in the company's ability to recover and gain ground once the sector it operates in starts to show signs of improvement.
In other recent news, TrueBlue has experienced some notable developments. BMO Capital maintained its Outperform rating on TrueBlue but revised its price target from $13.00 to $12.00. This adjustment came after TrueBlue's recent financial results fell short of market expectations, with both revenues and profits coming in below consensus. Despite the lower target, BMO Capital expressed continued belief in TrueBlue's potential to outperform its peers in a sector rebound.
In a separate analysis, BMO Capital updated its model for TrueBlue, adjusting certain assumptions related to interest and other income, and tax estimates. These modifications led to a decrease in the projected adjusted earnings per share (EPS) for the years 2024 and 2025.
These are recent developments and investors are closely monitoring TrueBlue's strategies and financial performance. TrueBlue's first quarter of 2024 earnings surpassed expectations, reporting an adjusted earnings per share of $0.03, compared to the consensus estimate of a -$0.37 loss.
Furthermore, TrueBlue's management has indicated growth potential in areas such as manufacturing, renewable energy, and transportation, despite broader market challenges.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on TrueBlue Inc.'s financial situation, providing context to BMO Capital's analysis. The company's market capitalization stands at $228.48 million, reflecting its current market valuation. TrueBlue's revenue for the last twelve months as of Q3 2024 was $1.67 billion, with a concerning revenue decline of 15.12% over the same period.
InvestingPro Tips highlight that TrueBlue is trading at a low revenue valuation multiple, which aligns with BMO Capital's reduced price target. This could indicate that the market has already priced in some of the challenges the company faces. Moreover, the tip that TrueBlue is "quickly burning through cash" supports the analyst's focus on the company's cost containment strategies as a crucial factor in its performance.
Another relevant InvestingPro Tip notes that analysts anticipate a sales decline in the current year, corroborating BMO Capital's conservative revision of estimates. This information, combined with the company's guidance for Q4 2024, paints a picture of the ongoing challenges in the staffing services sector.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for TrueBlue Inc., providing a deeper understanding of the company's financial health and market position.
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