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Company name CBIZ, Inc.
Stock ticker CBZ
Live stock price [stckqut]CBZ[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Poor
Sales growth Poor
EPS growth Poor
P/E growth Poor
EBIT growth Poor

ANALYSIS

Confident Investor Rating Poor
Target stock price (TWCA growth scenario) $5.87
Target stock price (averages with growth) $6.43
Target stock price (averages with no growth) $6.74
Target stock price (manual assumptions) $3.51

The following company description is from Google Finance: http://www.google.com/finance?q=cbz

CBIZ, Inc. (CBIZ) provides professional business services, products and solutions. These services are provided to businesses of various sizes, as well as individuals, governmental entities and not-for-profit enterprises throughout the United States and parts of Canada. CBIZ delivers its services through four practice groups: Financial Services, Employee Services, and National Practices. Its Financial Services group includes accounting, tax, financial advisory, valuation, litigation support, internal audit, family office services, fraud detection and real estate advisory. Its Employee Services group provides group health, property and casualty, retirement planning, payroll services, life insurance, human capital management, compensation consulting, recruiting and actuarial services. In September 2013, CBIZ, Inc completed the sale of its Medical Management Professionals (MMP) business to Zotec Partners, LLC.

 

Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.
[s2If current_user_can(s2member_level1)]
In order to assist you in using the techniques of this book, the values that I used when calculating the Manual pricing above were:

Stock price at the time of the calculation: $7.89

Growth: 0.04

Current EPS (TTM): $0.58

P/E: 8

Future EPS Calc: $0.7

Future Stock Price Calc: $5.64

Target stock price: $3.5

I hope that this makes you a better investor. [/s2If]

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ID-10099202Most people that I speak to regarding investing strategies will tell me about their employer stock program. Using this program, you are investing in your employer at a discount from the market rates.

A typical employer investment program will allow you to save a portion of your after-tax regular paycheck into a special fund. This is a great strategy as it allows you to pay yourself first before any other bills are paid. I applaud this type of program! However, doing this doesn’t make investing in your employer a great deal.

The second step of the investment program that provides investing in your employer will vary somewhat from employer to employer. Typically, the employer selects a period of time of either 3-months or 6-months. The value of the stock to be purchased is determined by either the lowest of either the start or the end of the period. In some cases, I have heard that the average of the start and end are used. The employer may elect to give a discount from that price, as well. The discount can be 10% or 15%.

This can make investing in your employer seem like a great deal. You have an automatic savings program that allows you to buy at the best price over a period of time. The employer may have even subsidized the investment which further increases your profit.

Unfortunately, this is where the good habits tend to stop. I have seen people that use this type of program develop an effective portfolio where 20-40% of their portfolio is in their employer. This is way too high for any single company and even worse for your employer. Remember, you are already investing your time every week in that company. They are providing 100% of your income.

Think of your paycheck as a dividend check based on your labor. You are investing your daily work time into that company, and in return you are receiving a dividend check for that effort. Under that scenario, your employer already plays an extremely large portion of your portfolio. By investing in the company as well, you are committing an outlandish portion of your net worth to one investment.

So what is the solution to investing in your employer?

If your employer is subsidizing the program by discounting the purchase by at least 5%, you should participate. Investing in your employer for the short term will then make good economic sense. However, once the investment in your employer reaches 5% of your portfolio, you need to start liquidating the stock. You could do this on a LIFO (Last In First Out) basis and immediately sell the stock you just bought at a discount. You could also do it on a FIFO (First In First Out) basis and sell the shares you first accumulated in the program.

Avoid investing too much in the stock of any company that you currently work for. You are essentially doubling your risk. Should something go wrong with the company, you are looking at losing both your investment and paycheck at the same time. Although, if employee shares can be purchased at discount, it might be a good bargain and worth purchasing. While it is fine to support your company by purchasing stock, you do not want your portfolio to consist mainly of that one investment. When you put all your faith in one stock and it does not perform at the level you expected, you can end up losing all or most of your investment as the price of the stock falls or if a company goes out of business. This is even more painful if you lose your job, as well.

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