TrueBlue, Inc. (TBI) stock intrinsic value fair value estimate & owner earnings analysis

TrueBlue sells temporary labor and hiring services, mostly in the United States. Its brands are PeopleReady (on-demand and skilled-trades labor, including energy and commercial driving), PeopleManagement, and PeopleSolutions (recruitment outsourcing, formerly PeopleScout, plus healthcare staffing since the January 31, 2025 purchase of Healthcare Staffing Professionals for $35.2 million in cash). Revenue has moved sharply with the economy: it fell 22% in 2020 and about 30% between 2022 and 2024. The ten largest clients were 26.2% of 2025 revenue (22.4% in 2024, 20.5% in 2023); none exceeded 10%. What an owner actually earned. We measure owner earnings as operating cash flow, setting aside swings in receivables, payables and insurance-claim balances, less the cost of stock pay and the capital spending needed to stay in business. On that measure the company earned between $2.03 and $2.56 per share in each of 2016-2019, 2021 and 2022 (and $0.50 in 2020), then lost $0.61 in 2023, $0.97 in 2024 and $0.64 in 2025. Even those losses are flattered: the company lowered its estimates of old workers' compensation claims, a non-cash gain of $35.4 million in 2024 and $19.6 million in 2025, and says it expects such gains to diminish. Without them, 2025 would have been a loss of about $38.6 million ($1.29 a share) and 2024 about $64.8 million ($2.15 a share). Gross profit fell from $602 million in 2022 to $368 million in 2025 while selling, general and administrative costs fell from $501 million to $371 million, so cost cuts offset just over half of the lost gross profit. In 2025 gross margin fell 310 basis points to 22.8%: 200 from a shift toward lower-margin renewable-energy work, weaker recruitment outsourcing and the healthcare acquisition, 90 from smaller workers' compensation reserve releases and 20 from software depreciation. In the first half of 2026 revenue grew 9.8% to $841.6 million but gross profit fell 5.2% to $170.6 million (a 20.3% margin versus 23.5%). The operating loss was $19.0 million, including a $3.7 million goodwill charge; the second quarter's operating loss narrowed to $1.2 million from $2.9 million a year earlier. On our measure, first-half owner earnings were about -$0.40 a share, against about breakeven a year earlier. Where we measure from. The last three years differ so sharply from the seven before that we judge the business from 2023 on: workforce reductions in each year (about $5 million, $7 million and $9 million in 2023-2025), all of PeopleReady's remaining goodwill ($59.1 million) written off in 2024, and a new healthcare acquisition in 2025. Even the 2020 shutdown, when revenue fell 22%, still produced positive owner earnings, so today's losses are not only the economy; margins and the cost structure have shifted. The middle value of cash earned before paying lenders (owner earnings plus interest paid) for 2023-2025 is a loss of $0.58 a share, about $17.6 million a year. Owner earnings improved by $0.33 a share in 2025 (from -$0.97 to -$0.64); we assume no improvement in the year ahead because the first half of 2026 was weaker than the first half of 2025. Growth. We credit no growth in the base or bear cases. Revenue growth in 2026 has not raised gross profit, and acquisitions have repeatedly been written off (goodwill and intangible write-offs of $103.5 million in 2016, $175.2 million in 2020, $9.5 million in 2023 and $59.7 million in 2024). Only the bull case credits a recovery, described below. Future cash is valued in today's dollars at 6% a year; the company has about 30.4 million shares. Base case: $2.17 per share. Using the June 28, 2026 balance sheet, losses continue at the 2023-2025 rate for two more years (our judgement), after which the business stops losing money but earns nothing for owners, so it is worth its net working capital: receivables of $267.8 million (counted at 98 cents on the dollar; write-offs were below 0.4% of revenue in each of 2022-2024) plus $23.3 million of cash, less $31.7 million of payables and accruals, about $69.9 million of accrued wages and taxes and $3.3 million of other current liabilities, or $180.8 million. Two years of losses, valued today, take off $32.2 million, leaving $148.5 million for the business. It owes $82.4 million on its credit line, so the difference is $66.1 million, or $2.17 a share. We do not count goodwill, software or equipment, nor the $118.8 million of restricted cash and investments that support the workers' compensation program, which exceed the $86.0 million claims reserve by $32.8 million ($1.08 a share), because insurers set collateral levels and can change them. Bear case: -$0.66 per share. The recent downturn does not end: revenue already fell 30% from 2022 to 2024, and losses continue at the 2025 rate excluding reserve releases ($34.0 million a year of cash before interest) for two more years, after which the company winds down. In a wind-down its $56.0 million of lease obligations ($11.3 million due within a year and $44.7 million after) come due. Net working capital of $180.8 million, less leases of $56.0 million and two years of losses valued at $62.3 million, leaves $62.4 million for the business. Against $82.4 million owed, the company would owe about $20.0 million more than it is worth (-$0.66 a share), meaning shareholders receive nothing. Bull case: $12.53 per share. Selling, general and administrative costs are $129.6 million lower than in 2022, so gross profit that returns drops through to owners more than it used to. The case assumes cash before interest of -$0.58 a share in the year ahead, zero in the second year, $1.00 in the third and $2.09 from the fourth year (the lowest of the company's six strong years), then declining 5.7% a year indefinitely, the pace at which revenue has shrunk since 2016. Reaching $2.09 needs owner earnings roughly $98 million a year better than 2025 excluding reserve releases. The business would be worth $464.0 million; the company owes $82.4 million; the difference is $381.6 million, or $12.53 a share. Debt. $82.4 million was drawn on the revolving credit line at June 28, 2026, up from $65.8 million at the end of 2025 and $7.6 million a year earlier. It matures February 9, 2029 and is secured by substantially all assets of the company and its main U.S. subsidiaries. On January 30, 2026 the line was cut from $255 million to $175 million and converted to an asset-based facility with a borrowing base and a minimum excess availability test, which can later be replaced by a springing fixed charge coverage test once a minimum coverage ratio is met for two consecutive quarters on or after September 27, 2026. At year-end 2025, before that change, the company reported a fixed charge coverage ratio of 2.97 (minimum 1.25) and an asset coverage ratio of 1.88 (minimum 1.00), and those covenants capped share repurchases at $25 million per twelve months. Interest paid was $2.8 million in the first half of 2026 and $4.6 million in 2025. We deduct the debt at face value in every case. What we could not reconcile. In the filings we reviewed we did not find a breakdown of workers' compensation reserve releases for 2023 or earlier, or for the first half of 2026, so those periods are shown as reported and may be flattered in the same way. Earlier estimates assumed a margin recovery and were made on a different basis, so they are not comparable. What has changed in the business since then: first-half 2026 gross profit fell 5.2% despite 9.8% revenue growth, borrowings rose to $82.4 million with the credit line cut to $175 million, and the second-quarter operating loss narrowed. Why the margin-of-safety price is $0.90. How sure are we of the earnings level? Not very: owner earnings were above $2 per share in six of the last ten years, yet the last three were all losses and the first half of 2026 was weaker than a year earlier. The assumed loss of $17.6 million a year could easily be larger: 2025 excluding reserve releases lost $34.0 million. The worst plausible outcome is the bear case: lenders would be repaid out of receivables ($267.8 million against $82.4 million drawn), but shareholders would receive nothing, and client concentration has risen (20.5% to 26.2% in two years). If we are wrong about the things most likely to go wrong, the shares would be worth $1.69 if losses last three years instead of two; $1.42 if, on top of that, receivables bring in 95 cents instead of 98; and $0.34 if instead the company winds down after one more year of losses at the 2025 rate. No dividend has been declared and no shares were repurchased in 2025, so nothing is paid over the holding period, which the price assumes is two to three years. From $0.90 the three-year-loss case implies about 23% a year and the compounded case about 17%, while the wind-down case would lose most of the price. The price is not set higher, because above this level the cushion against a longer period of losses disappears.