Insperity, Inc. (NSP) Up 5.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Insperity, Inc. (NSP). Shares have added about 5.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Insperity, Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Insperity Q2 Earnings Beat Estimates
Insperity reported solid second-quarter 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings (excluding 31 cents from non-recurring items) of 64 cents per share missed the Zacks Consensus Estimate by 48.4% and declined 44.8% year over year. Revenues of $1.59 billion surpassed the consensus estimate by 2.6% and increased 10.7% year over year.
The average number of worksite employees paid per month was 311,304, increasing 7.2% year over year and beating our estimate of 311,262.
Operating Results
Gross profit declined 6.3% year over year to $224.6 million. Operating expenses increased 9% year over year to $208.8 million, beating our estimated $199.6 million. Operating expenses per worksite employee per month rose 1.8% to $224.
Operating income decreased 67.3% year over year to $15.8 million. Operating income per WSEE per month improved 69.1% to $17.
Balance Sheet & Cash Flow
Insperity exited second-quarter 2023 with adjusted cash, cash equivalents and marketable securities of $580.1 million, compared with $732.1 million at the end of the prior quarter. Long-term debt amounted to $369.40 million, flat sequentially.
During the reported quarter, NSP repurchased almost 289,000 shares for $35 million and paid out $20 million as cash dividends. Capital expenditures totaled $7.2 million.
Q3 Guidance 2023
Adjusted EBITDA is anticipated to be between $57 million and $81 million, down from the prior range of $81 million and $90 million. Average WSEEs are expected in the range of 315,500-317,000.
The adjusted earnings per share guidance for the third quarter is provided between 69 and $1.14, down from the prior range of $1.16 and $1.32.
2023 Guidance
Insperity now projects adjusted earnings in the band of $4.35-$5.32 per share, down from the prior guidance of $5.62-$6.39 per share. Adjusted EBITDA is now anticipated in the range of $300-350 million, down from the previously expected $370-$410 million. Average WSEEs are expected to be 314,200-315,600.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -31.77% due to these changes.
VGM Scores
At this time, Insperity, Inc. has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Insperity, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Insperity, Inc. is part of the Zacks Staffing Firms industry. Over the past month, Robert Half (RHI), a stock from the same industry, has gained 1.7%. The company reported its results for the quarter ended June 2023 more than a month ago.
Robert Half reported revenues of $1.64 billion in the last reported quarter, representing a year-over-year change of -12%. EPS of $1 for the same period compares with $1.60 a year ago.
Robert Half is expected to post earnings of $0.80 per share for the current quarter, representing a year-over-year change of -47.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Robert Half has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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