In light of prevailing economic and geopolitical uncertainties, the company has revised its revenue expectations for fiscal year 2025. The updated forecast predicts revenues between $2.8 billion and $2.95 billion, adjusting the previous range of $2.9 billion to $2.95 billion. This revision aligns with consensus estimates, which stood at $2.92 billion.
The decision to lower the revenue outlook stems from observed impacts on non-recurring service lines, which are anticipated to persist throughout the fiscal year. These services constitute a significant portion of the company's income, particularly for the remaining months of the year, and the limited ability to predict client demand has influenced this cautious adjustment.
Despite the revenue revision, the company remains confident in its previously stated adjusted EBITDA guidance, which remains at $450 million to $456 million for the year. This stability reflects an underlying expectation of resilience in operational performance despite external challenges.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 2 analysts, the average target price for CBIZ Inc (CBZ, Financial) is $98.50 with a high estimate of $102.00 and a low estimate of $95.00. The average target implies an upside of 27.52% from the current price of $77.24. More detailed estimate data can be found on the CBIZ Inc (CBZ) Forecast page.
Based on the consensus recommendation from 3 brokerage firms, CBIZ Inc's (CBZ, Financial) average brokerage recommendation is currently 1.3, indicating "Buy" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for CBIZ Inc (CBZ, Financial) in one year is $96.41, suggesting a upside of 24.82% from the current price of $77.24. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the CBIZ Inc (CBZ) Summary page.
CBZ Key Business Developments
Release Date: February 26, 2025
- Total Revenue Growth (Q4 2024): Up 40.5%.
- Revenue from Markham Acquisition (Q4 2024): $108.9 million, a 33.2% increase.
- Same Unit Revenue Growth (Q4 2024): Up 6.4%.
- Same Unit Revenue Growth - Financial Services (Q4 2024): Up 7.2%.
- Same Unit Revenue Growth - Benefits and Insurance (Q4 2024): Up 3.8%.
- Total Revenue Growth (Full Year 2024): Up 14%.
- Revenue from Markham Acquisition (Full Year 2024): $108.9 million, a 6.8% increase.
- Same Unit Revenue Growth (Full Year 2024): Up 4.8%.
- Adjusted Earnings Per Share (2024): $2.67, a 10.8% increase over the prior year.
- Depreciation and Amortization (2024): $48.1 million, with $38 million attributed to CBIZ excluding Markham.
- Interest Expense (2024): $19.9 million attributed to CBIZ excluding Markham.
- Adjusted EBITDA Growth (2024): Up approximately 9% to 10% over the prior year.
- Revenue Projection (2025): $2.9 billion to $2.95 billion.
- Adjusted Earnings Per Share Projection (2025): $3.60 to $3.65.
- Adjusted EBITDA Projection (2025): Approximately $455 million.
- Total Debt (Year-End 2024): $1.42 billion.
- Interest Expense Projection (2025): Approximately $100 million.
- Capital Spending (2024): Approximately $13 million.
- Capital Spending Projection (2025): $20 million to $25 million.
- Tax Rate Projection (2025): Approximately 29%.
- Fully Diluted Share Count Projection (2025): Approximately 64.5 million to 65 million shares.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CBIZ Inc (CBZ, Financial) achieved growth across nearly every major service line in 2024, including accounting, tax, advisory, and government healthcare consulting.
- The acquisition of Markham, the largest in CBIZ's history, solidified its position as a leading provider of professional services to middle market businesses.
- CBIZ Inc (CBZ) reported a 40.5% increase in total revenue for the fourth quarter, with a significant contribution from the newly acquired Markham operations.
- The company has a healthy pipeline of M&A opportunities for 2025, indicating potential for further growth and expansion.
- CBIZ Inc (CBZ) expects adjusted earnings per share for 2025 to be within a range of $3.60 to $3.65, reflecting strong financial performance expectations.
Negative Points
- The acquisition of Markham resulted in a significant seasonal operating loss for the months of November and December, impacting overall financial results.
- The departure of a small group of producers in the Southeast region negatively affected the property and casualty insurance group within the benefits and insurance division.
- Integration of Markham is expected to incur significant one-time transaction and integration costs, impacting cash flow in 2025.
- The increased concentration of core tax and accounting business services due to the Markham acquisition will impact the quarterly seasonality of the business.
- Interest expense for 2025 is projected at approximately $100 million, which could affect profitability if not managed effectively.
