Results: Insperity, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts
A week ago, Insperity, Inc. (NYSE:NSP) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$1.0b, some 2.8% above estimates, and statutory earnings per share (EPS) coming in at US$0.51, 78% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Insperity after the latest results.
View our latest analysis for Insperity
Taking into account the latest results, Insperity's four analysts currently expect revenues in 2021 to be US$4.39b, approximately in line with the last 12 months. Statutory earnings per share are forecast to fall 15% to US$3.36 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.34b and earnings per share (EPS) of US$3.19 in 2021. So the consensus seems to have become somewhat more optimistic on Insperity's earnings potential following these results.
The consensus price target rose 5.2% to US$91.00, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Insperity analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$71.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Insperity's revenue growth is expected to slow, with forecast 1.9% increase next year well below the historical 12%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.9% next year. Factoring in the forecast slowdown in growth, it seems obvious that Insperity is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Insperity's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Insperity's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Insperity going out to 2022, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for Insperity that you need to be mindful of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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