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Insperity (NSP) Q1 Earnings: Is a Surprise in the Cards?

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Insperity, Inc. (NSP - Free Report) is set to report first-quarter 2017 results on May 1. Though the company reported a positive earnings surprise of 7.14% last quarter, it has an average negative earnings surprise of 0.76% over the trailing four quarters.

Let’s see how things are shaping up for this announcement.

Factors to Consider

We believe Insperity is well placed to benefit from the booming PEO industry. Moreover, improved client retention, diversified product portfolio, growth in worksite employees and strength in its ancillary products are the other positives.

However, a sluggish global macro environment increases the risk of headcount reduction at client companies. An increase in health care costs does not bode well for Insperity as well as it is one of the major components of operating expenses. Furthermore, increasing competition from the likes of Automatic Data Processing Inc. (ADP - Free Report) and TriNet Group, Inc. remains a concern.

For the first quarter of 2017, Insperity projects adjusted earnings in the range of $1.78 to $1.87 a share. Adjusted EBITDA is projected in therange of $63 million to $66 million and average worksite employees (WSEs) are expected in the range of 174,200 to 175,800, representing growth of 10% to 11%.

Insperity, Inc. Price and EPS Surprise

Insperity, Inc. Price and EPS Surprise | Insperity, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Insperity is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Insperity currently has a 0.00% ESP because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.70. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Insperity has a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

AMTEK Inc. (AME - Free Report) with an Earnings ESP of +1.79% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exelixis, Inc.(EXEL - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #3.

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