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Insperity, Inc. (NSP) Up 9.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Insperity, Inc. (NSP). Shares have added about 9.9% 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 catalysts.

Insperity Q2 Earnings and Revenues Surpass Estimates

Insperity reported better-than-expected second-quarter 2021 results.

Adjusted earnings of 91 cents per share beat the Zacks Consensus Estimate by 40% but decreased 40.9% year over year. The reported figure lies above the guidance of 60-70 cents.

Revenues of $1.19 billion surpassed the consensus mark by 7.7% and increased 19.3% year over year. The upside was backed by 12% increase in revenues per worksite employees (WSEEs) and 7% increase in paid worksite employees.

The average number of worksite employees paid per month, 243,270, inched up 6.7% year over year.

Operating Results       

Gross profit of $199.55 million decreased 9.4% from the year-ago quarter. Gross margin of 16.8% declined from 22.2% in the year-ago quarter. Gross profit per worksite employee per month decreased 15.2% year over year to $273.

Adjusted EBITDA decreased 34.5% year over year to $60.2 million. Adjusted EBITDA per worksite employee per month decreased 39.3% to $82.

Operating expenses increased 11.6% year over year to $164.33 million. Operating expenses per worksite employee per month increased 4.7% to $225.

Operating income decreased 51.7% year over year to $35.22 million. Operating income per worksite employee per month fell 55.1% to $48.

Balance Sheet & Cash Flow

Insperity exited second-quarter 2021 with adjusted cash, cash equivalents and marketable securities of $212.84 million compared with $196.65 million at the end of the prior quarter. Long-term debt amounted to $369.40 million, flat sequentially.

During the reported quarter, the company repurchased shares worth $8.8 million and paid out $17.3 million in cash dividends. Capital expenditures totaled $8.6 million.

Q3 Guidance

For third-quarter 2021, Insperity projects adjusted earnings in the range of 74-93 cents per share. The current Zacks Consensus Estimate of 65 cents lies below the guided range. Adjusted EBITDA is anticipated between $52 million and $62 million. Average WSEEs are expected in the range of 253,800-256,100.

2021 Guidance

Insperity raised its guidance for 2021. The company now projects adjusted earnings in the band of $4.00-$4.59 per share compared with the prior guidance of $3.83-$4.40. Adjusted EBITDA is now anticipated in the range of $258-$288 million compared with the prior guidance of $250-$280 million. Average WSEEs are expected in the range of 247,100-249,500 compared with the prior guidance of 243,600-248,300.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Insperity, Inc. has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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 A. 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 #2 (Buy). We expect an above average return from the stock in the next few months.


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