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Insperity Up 20.8% YTD: Will the Rally Continue Through '18?
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Insperity, Inc.’s (NSP - Free Report) price performance has been impressive year to date. The stock has rallied 20.8% compared with the industry’s gain of 5.1%.
Given its strength in professional employer organization (PEO) industry and solid product portfolio along with low attrition rates, we believe that the stock has a decent upside potential.
Let’s see what the rest of the year holds in store for Insperity.
Ancillary Products Portfolio Continues to Expand
Insperity is strengthening its ancillary products portfolio, which is expected to become a key growth driver going ahead. These products allow the company to tap clients, who do not require its full PEO/Workforce Optimization solution, thus opening avenues for cross-selling later on.
The company has been strategically expanding such products and services. Not only does this benefit it in terms of revenue contribution but also in terms of profitability.
The U.S. PEO industry remains largely untapped, leaving ample scope for growth. It bodes well for the company especially as workforce synchronization continues to gain traction with mid-market clients.
Furthermore, the company is likely to witness solid growth driven by the increase in tenured business process automations (BPAs). Rising demand for its offerings, propelled by the Affordable Care Act (ACA) and some other similar bills, is another important driving factor which will allow it to expand the company’s client base.
Client Retention to Remain Strong
Insperity has made dedicated efforts to improve its client retention rates, which have proved conducive to company's growth and might continue to help realizing a sizeable recurring revenue base. In fact, the company has especially designed solutions catering to the requirement of each of its client segment (small, emerging gross and mid-market clients).
This, in turn, has enabled it to adopt a targeted strategy for each segment to minimize client attrition. In 2017, client attrition rate was 15% compared with 14% in 2016. This boosted its client retention rate consistently over the past few quarters. In 2017 and 2016, the retention rates were 85% and 86%, respectively, better than its long-term average of 83%.
In the trailing four quarters, Korn/Ferry, GEE Group and ManpowerGroup have delivered a positive earnings surprise of 8.1%, 6.3% and 2.7%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Insperity Up 20.8% YTD: Will the Rally Continue Through '18?
Insperity, Inc.’s (NSP - Free Report) price performance has been impressive year to date. The stock has rallied 20.8% compared with the industry’s gain of 5.1%.
Given its strength in professional employer organization (PEO) industry and solid product portfolio along with low attrition rates, we believe that the stock has a decent upside potential.
Let’s see what the rest of the year holds in store for Insperity.
Ancillary Products Portfolio Continues to Expand
Insperity is strengthening its ancillary products portfolio, which is expected to become a key growth driver going ahead. These products allow the company to tap clients, who do not require its full PEO/Workforce Optimization solution, thus opening avenues for cross-selling later on.
The company has been strategically expanding such products and services. Not only does this benefit it in terms of revenue contribution but also in terms of profitability.
Insperity, Inc. Revenue (TTM)
Insperity, Inc. Revenue (TTM) | Insperity, Inc. Quote
PEO Industry Offers Room for Growth
The U.S. PEO industry remains largely untapped, leaving ample scope for growth. It bodes well for the company especially as workforce synchronization continues to gain traction with mid-market clients.
Furthermore, the company is likely to witness solid growth driven by the increase in tenured business process automations (BPAs). Rising demand for its offerings, propelled by the Affordable Care Act (ACA) and some other similar bills, is another important driving factor which will allow it to expand the company’s client base.
Client Retention to Remain Strong
Insperity has made dedicated efforts to improve its client retention rates, which have proved conducive to company's growth and might continue to help realizing a sizeable recurring revenue base. In fact, the company has especially designed solutions catering to the requirement of each of its client segment (small, emerging gross and mid-market clients).
This, in turn, has enabled it to adopt a targeted strategy for each segment to minimize client attrition. In 2017, client attrition rate was 15% compared with 14% in 2016. This boosted its client retention rate consistently over the past few quarters. In 2017 and 2016, the retention rates were 85% and 86%, respectively, better than its long-term average of 83%.
Zacks Rank & Other Stocks to Consider
Insperity has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the same space are Korn/Ferry International (KFY - Free Report) , GEE Group (JOB - Free Report) and ManpowerGroup (MAN - Free Report) .
In the trailing four quarters, Korn/Ferry, GEE Group and ManpowerGroup have delivered a positive earnings surprise of 8.1%, 6.3% and 2.7%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>