Here's Why Insperity (NSP) Deserves to be Retained Right Now
Insperity Inc. NSP thrives on Professional Employer Organization (PEO) sector growth fueled by increased costs in workers' compensation, safety initiatives, legal actions and complex regulations. The rising gross profit margin is a positive signal for the company's performance.
NSP has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Factors in Favor
Insperity exhibits robust performance fueled by the expanding PEO sector. This growth is propelled by the increasing presence of small and medium-sized enterprises, rising expenses linked to workers' compensation insurance, workplace safety initiatives, employee grievances and legal actions, as well as the intricate regulation of payroll, payroll tax and employment matters.
Insperity, Inc. Revenue (TTM)
Insperity, Inc. revenue-ttm | Insperity, Inc. Quote
Insperity is dedicated to consistently rewarding its shareholders. In 2022 and 2021, the company repurchased 770,000 and 716,000 shares, amounting to $73 million and $69.7 million, respectively, and distributed dividends totaling $77 million and $144.2 million. In 2020, Insperity repurchased 1.4 million shares for $99.4 million and paid out dividends amounting to $61.9 million. These actions underscore Insperity's commitment to enhancing shareholder value and demonstrate confidence in its business outlook.
According to Staffing Industry Analysis, a crucial performance metric for assessing a staffing firm is its gross profit and gross profit margin. The company saw an uptick in gross profit from $4,153 in 2021 to $4,928 in 2022. In 2021, the gross profit margin was 16.5%, which saw a further improvement to 17% in 2022. A rising gross profit margin is favorable, indicating efficient operational performance for the company.
Factors Against
Insperity functions within a notably fragmented and competitive PEO industry. The competition in this sector revolves primarily around the quality of services provided, along with the advantages linked to packaging and pricing. Moreover, the PEO industry faces a relatively low level of market penetration. PEOs are also significantly influenced by climatic conditions and the market segments in their operational areas. Looking ahead, competition is anticipated to heighten as PEOs pursue national expansion.
NSP currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Here are a few better-ranked stocks from the Business Services sector that may be considered:
Gartner IT: The Zacks Consensus Estimate of Gartner’s 2023 revenues indicates 7.9% growth from the year-ago figure, while earnings are expected to decline 1.9%. The company has beaten the consensus estimate in all four quarters, with an average surprise of 34.4%.
IT sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DocuSign DOCU: The Zacks Consensus Estimate of DOCU’s 2023 revenues indicates 8.6% growth from the year-ago figure, while earnings are expected to grow 29.1%. The company has beaten the consensus estimate in all four quarters, the average surprise being 27.1%.
DOCU holds a Zacks Rank #2 (Buy).
Broadridge Financial Solutions BR: The Zacks Consensus Estimate of Broadridge’s 2023 revenues indicates 7.7% growth from the year-ago figure, while earnings are expected to grow 10.1%. The company has beaten the consensus estimate in three of the past four quarters and matched on one instance, the average surprise being 5.4%.
BR holds a Zacks Rank of 2.
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