Business Services Stocks to Watch: IBM Falters as MSA Safety and Brink's Shine
The business services sector has seen significant growth over the past six months, outperforming the S&P 500 index with a return of 19.8%. This trend is driven by companies' increasing reliance on outsourcing non-core functions and the demand for their offerings.
However, not all businesses in this space are created equal. One company that may be worth reconsidering is IBM (IBM), which has faced growth challenges over the past five years with a 4.3% annual revenue increase falling short of its peers.
On the other hand, two companies stand out for their resilience: MSA Safety (MSA) and Brink's (BCO). MSA Safety has demonstrated efficient scaling through improved adjusted operating margins, share buybacks, and increasing free cash flow. Its stock price of $187.86 represents a valuation ratio of 19.7x forward P/E.
Brink's, known for its iconic armored trucks, also shows promise with economies of scale providing operating leverage and returns on capital climbing as management makes more lucrative bets. The company trades at $106.27 per share, or 11.1x forward P/E.