A prudent investment decision involves buying well-performing stocks at the right time, while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bull run.
Insperity, Inc. NSP has performed well in the past year and has the potential to sustain the momentum in the near term. Consequently, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the staffing services stock has had an impressive run on the bourse in the past year. Shares of Insperity have returned 72.9% against the industry’s decline of 4.8%.
Solid Rank & VGM Score: Insperity currently carries a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: The direction of earnings estimate revisions serves as an important pointer when it comes to the price of a stock. The Zacks Consensus Estimate for first-quarter earnings has moved up 20.5% over the past 60 days. The same has moved up 7.9% for 2019 and 3.2% for 2020.
Positive Earnings Surprise History: Insperity has an impressive earnings surprise history. The company outpaced the consensus estimate in each of the trailing four quarters, delivering average positive earnings surprise of 15.1%.
Strong Growth Prospects: The Zacks Consensus Estimate for first-quarter 2019 earnings is pegged at $1.88, indicating year-over-year growth of 33.3%. Moreover, earnings are expected to register 22.9% growth in 2019 and 18.7% in 2020. The stock has an expected long-term (three to five years) earnings per share growth rate of 18%.
Driving Factors: The staffing industry is benefiting from a strong economy, leading to robust manufacturing and non-manufacturing activities, and higher corporate spending post the tax reform. So, there is plenty of room for growth for Insperity in the United States in the near to mid-term as the demand environment remains strong. While the economy continues to create new jobs despite a record low jobless rate, a tight labor market is compelling companies to pay higher to attract and retain employees.
Insperity’s top line benefits from rise in average number of worksite employees paid per month. Notably, the company’s revenues of $3.83 billion in 2018 (up 16% year over year) benefited from a 14.5% increase in average number of worksite employees paid per month and 1.4% increase in revenues per worksite employee per month. Average number of worksite employees paid per month was 209,123 and revenues per worksite employee per month were $1,526 in 2018. Worksite employee growth can be attributed to strong sales, higher client retention and rise in net hiring of worksite employees by the company’s client base.
We are also impressed by Insperity’s efforts to reward its shareholders. In 2018, Insperity repurchased almost 1,198,000 shares for $113.3 million and paid dividends totaling $33.4 million. Such moves indicate Insperity’s commitment to create value for shareholders and underline its confidence in its business.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are Omnicom OMC, Robert Half RHI and Automatic Data Processing ADP. While Robert Half sports a Zacks Rank #1, Omnicom and Automatic Data Processing carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Omnicom, Robert Half and Automatic Data Processing is 6.9%, 8.4% and 12.8%, respectively.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Omnicom Group Inc. (OMC) : Free Stock Analysis Report
Robert Half International Inc. (RHI) : Free Stock Analysis Report
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Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
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