CBIZ (CBZ)

Financial services provider CBIZ (NYSE:CBZ) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 58.1% year on year to $693.8 million. On the other hand, the company’s full-year revenue guidance of $2.88 billion at the midpoint came in 2.6% above analysts’ estimates. Its non-GAAP profit of $1.01 per share was 12.6% above analysts’ consensus estimates.

Company Overview

With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE:CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.

The sector stands to benefit from ongoing digital transformation, increasing corporate demand for cost efficiencies, and the growing complexity of regulatory and cybersecurity landscapes. For those that invest wisely, AI and automation capabilities could emerge as competitive advantages, enhancing process efficiencies for the companies themselves as well as their clients. On the flip side, AI could be a headwind as well as the technology could lower the barrier to entry in the space and give rise to more self-service solutions. Additional challenges in the years ahead could include wage inflation for highly skilled consultants and potential regulatory scrutiny on outsourcing practices—especially in industries like finance and healthcare where who has access to certain data matters greatly.

CBIZ competes with other professional services firms including Paychex (NASDAQ:PAYX), ADP (NASDAQ:ADP), Willis Towers Watson (NASDAQ:WTW), and Marsh & McLennan (NYSE:MMC), as well as regional accounting and consulting firms across the country.

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $2.68 billion in revenue over the past 12 months, CBIZ is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, CBIZ’s sales grew at an incredible 22.9% compounded annual growth rate over the last five years. This is an encouraging starting point for our analysis because it shows CBIZ’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. CBIZ’s annualized revenue growth of 31% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, CBIZ achieved a magnificent 58.1% year-on-year revenue growth rate, but its $693.8 million of revenue fell short of Wall Street’s lofty estimates.

Looking ahead, sell-side analysts expect revenue to grow 9.8% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is admirable and suggests the market is forecasting success for its products and services.

CBIZ’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 10.8% over the last five years. This profitability was higher than the broader business services sector, showing it did a decent job managing its expenses.

Looking at the trend in its profitability, CBIZ’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, CBIZ generated an operating margin profit margin of 8.5%, down 3 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

CBIZ’s astounding 23.8% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Although it performed well, CBIZ’s two-year annual EPS growth of 28.3% lower than its 31% two-year revenue growth.

Diving into the nuances of CBIZ’s earnings can give us a better understanding of its performance. CBIZ’s operating margin has declined over the last two yearswhile its share count has grown 24.5%. This means the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q3, CBIZ reported adjusted EPS of $1.01, up from $0.84 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects CBIZ’s full-year EPS of $4.05 to shrink by 2.9%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

CBIZ has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.3% over the last five years, better than the broader business services sector.

Taking a step back, we can see that CBIZ’s margin dropped by 12.7 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although CBIZ has shown solid business quality lately, it historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 10%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, CBIZ’s ROIC decreased by 3.1 percentage points annually over the last few years. If its returns keep falling, it could suggest its profitable growth opportunities are drying up. We’ll keep a close eye.

CBIZ reported $16.97 million of cash and $1.57 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $393.8 million of EBITDA over the last 12 months, we view CBIZ’s 3.9× net-debt-to-EBITDA ratio as safe. We also see its $100 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see CBIZ beat analysts’ EPS expectations this quarter. We were also glad its full-year revenue guidance exceeded Wall Street’s estimates. On the other hand, its revenue missed. Overall, this print had some key positives. The stock traded up 1.9% to $52.33 immediately after reporting.

Updated: December 4, 2025 at 11:25 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in CBIZ.

There are multiple reasons why we think CBIZ is an amazing business. For starters, its revenue growth was exceptional over the last five years. And while its projected EPS for the next year is lacking, its astounding EPS growth over the last five years shows its profits are trickling down to shareholders. Additionally, CBIZ’s solid free cash flow generation gives it reinvestment options.

CBIZ’s P/E ratio based on the next 12 months is 13.2x. Looking at the business services landscape today, CBIZ’s fundamentals really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $91.50 on the company (compared to the current share price of $53.57), implying they see 70.8% upside in buying CBIZ in the short term.