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Bull of the Day: Insperity (NSP)

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Headquartered in Houston, TX, Insperity, Inc. (NSP - Free Report) is a company that provides an array of human resources and business solutions services. These include: Workforce Optimization in the marketplace, MidMarket Solutions, Performance Management, Expense Management, Time and Attendance, Organizational Planning, Employment Screening, Recruiting Services, Retirement Services, Business Insurance and Technology Services.

Record Third Quarter Results

Last month, Insperity posted impressive Q3 results.

Adjusted earnings of 96 cents beat the Zacks Consensus Estimate of 82 cents and jumped 68% year-over-year; adjusted EBITDA increased 43% to $61.6 million.

Revenues grew 16% to $925 million thanks to a 15% increase in the average number of worksite employees (WSEEs) paid per month.

Gross profit increased 19%, driven by the WSEE growth as well as effective pricing and management of Insperity’s direct cost programs.

Insperity did raise its guidance for 2018, and projects adjusted earnings between $3.69 per share and $3.73 per share, which would represent growth between 51-52%. Adjusted EBITDA is projected to grow 33-34% to a range of $236-$238 million. The prior guided range was $225 million to $229 million.

In the company’s earnings release, Paul J. Sarvadi, chairman and CEO, said, “Our refined business model is continuing to generate outstanding growth and profitability as demonstrated by the recent quarter and year-to-date results. We are in an excellent position to continue double-digit growth and profitability as we look forward to 2019.”

Price Performance & Rising Estimates

Insperity, Inc. Price and Consensus

Insperity, Inc. Price and Consensus | Insperity, Inc. Quote

Year-to-date, NSP stock has managed to retain a 60% gain

Estimates have been rising lately too, pushing the stock towards a Zacks Rank #1 (Strong Buy).

For the current fiscal year, Insperity’s earnings are expected to grow more than 51% year-over-year. The Zacks Consensus Estimate has moved 19 cents higher in the past 60 days from $3.52 to $3.71 per share.

Next year looks pretty strong as well, and earnings are expected to grow roughly 15%; the consensus estimate sits at $4.27 per share, with five upward revisions in the last two months.

Bottom Line

Right now, the staffing industry is in a boom, which is working in favor for Insperity. The company’s professional employer organization (PEO) solutions revenues are in solid shape, and worksite employee growth is being driven higher by sales strength and higher client retention, among other factors.

And with cash on hand sitting at around $328 million, the future looks good for Insperity. For those investors looking for a business services stock to add to their portfolio, NSP should definitely be on the shortlist.

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