Insperity (NSP) Gains From Growing PEO Industry, Costs High
Insperity, Inc. NSP has outperformed its industry in the past six months with its shares surging 14.9% compared with the industry’s 6.6% increase.
Insperityhas an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
Insperity reported mixed fourth-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same. Adjusted earnings (excluding 22 cents from non-recurring items) of $1.21 per share outpaced the Zacks Consensus Estimate by 33% and rose more than 100% year over year.
Revenues of $1.49 billion missed the Zacks Consensus Estimate by 1% but increased 15.4% year over year. The upside was backed by a 14.3% increase in paid worksite employee (WSEE).
Insperity, Inc. Price
Insperity, Inc. price | Insperity, Inc. Quote
Current Position of NSP
NSP is benefiting from the strengthening Professional Employer Organization (PEO) market. The increasing average number of worksite employees has been benefiting the company.
The growing PEO industry has been supported by the increasing number of small and medium enterprises, employee benefits being the need of the hour with workplace safety, regulation of payroll, insurance benefits, etc. Complex regulation of payroll, payroll tax and employment issues are also drivers of the industry’s growth.
The company’s healthy topline can be correlated with the rising number of average worksite employees paid per month. The average number of WSEEs paid per month increased 17.7% to 295,005 which pushed the revenue growth of 19.4% along with a 1.5% increase in revenue per WSEE, in 2022.
The shareholder-friendly policies of the company have proved beneficial. Insperity puts constant effort to reward its shareholders. In 2022, it paid $76.6 million in dividends and repurchased approximately 770,000 shares of our common stock at a cost of $73.3 million. It repurchased 716,000 shares for $69.7 million and paid out dividends totaling $144.2 million in 2021. During 2020, the company repurchased 1.4 million shares for $99.4 million and paid out dividends totaling $61.9 million.
Some Concerning Points
The company has been spending heavily on growth, technology and product and service offerings. In 2022, the adjusted operating expenses were $760.99 million which is a 17.7% increase from the year-ago reported figure.
Insperity's current ratio at the end of fourth-quarter 2022 was pegged at 1.12, lower than the current ratio of 1.15 reported at the end of the prior quarter. It indicates that the company may have problems meeting its short-term debt obligations.
Zacks Rank and Stocks to Consider
NSP currently carries a Zacks Rank #3 (Hold).
Some top-ranked stocks in the Zacks Business Services sector are Omnicom GroupOMC, ICF International ICFI and Gartner, Inc. IT.
For first-quarter 2023, OMC’s earnings expect a slight increase from the year-ago reported figure to $1.4. The company’s earnings are expected to grow 3.5% on a year-over-year basis in 2023.
The Zacks Consensus Estimate for the company’s first-quarter 2023 earnings is pegged at $1.40, which has been revised downward by 1.4% in the past 60 days. The consensus estimate for the full year is $7.17 per share. This has been revised upward 13.5% in the past 60 days. OMC currently sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For first-quarter 2023, ICFI’s earnings are expected to increase 7.6% from the year-ago reported figure to $1.41. The company’s earnings are expected to grow 9.2% on a year-over-year basis in 2023.
The Zacks Consensus Estimate for the company’s first-quarter 2023 earnings is pegged at $1.41, which has been revised upward by 6% in the past 60 days. The consensus estimate for the full year is $6.3 per share. This has been revised upward 7.3% in the past 60 days. The company currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for IT’s first-quarter 2023 earnings is pegged at $2.04, which has been revised upward 3% in the past 60 days. The consensus estimate for the full year is $9.49 per share which has been revised slightly upward in the past 60 days. The company currently carries a Zacks Rank #2 (Buy).
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