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Insperity (NSP) Q3 Earnings Beat Estimates, Stock Up 2.5%
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Insperity, Inc. (NSP - Free Report) reported better-than-expected third-quarter 2020 results. Stock price increased 2.5% since earnings release owing to strong 2020 guidance. The company projects adjusted earnings in the band of $4.35-4.53 compared with the prior guidance of $3.67-4.04 per share. The updated guidance is above the current Zacks Consensus Estimate of $3.91.
So far this year, shares of Insperity have lost 1.3% compared with 21.1% decline of the industry it belongs to.
Adjusted earnings of 51 cents per share beat the consensus mark by 70% but declined 19.1% year over year. Revenues of $1007.8 million also surpassed the consensus estimate by 3%, but fell 3.4% year over year. The downfall was due to the FICA deferral program instituted as part of the CARES Act.
The average number of worksite employees paid per month of 231,750 inched up 1.7% sequentially, driven by worksite employees (WSEEs) hired or returning to work outpacing layoffs, client retention for both Q2 and Q3 remaining at our historical level of 99% and addition of WSEEs from solid new client sales throughout the pandemic.
Operating Results
Gross profit of $185 million increased 8% from the year-ago quarter’s figure. Results were driven by higher-than-expected paid WSEEs and pricing combined with significant favorable results in benefits and workers’ compensation costs. Gross margin of 18.4% improved from 16.3% in the year-ago quarter. Gross profit per worksite employee per month increased 12.7% year over year to $266.
Adjusted EBITDA was up 12.5% year over year to $57.5 million. Adjusted EBITDA margin of 5.7% improved from 4.9% in the year-ago quarter. Adjusted EBITDA per worksite employee per month increased 16.9% to $83.
Operating expenses increased 15.1% year over year to $156.3 million. Operating expenses per worksite employee per month increased 19.7% to $225.
Operating income decreased 17.2% year over year to $28.7 million. Operating income per worksite employee per month fell 14.6% to $41.
Balance Sheet & Cash Flow
Insperity exited third-quarter 2020 with adjusted cash, cash equivalents and marketable securities of $212.7 million compared with $268.97 million at the end of the prior quarter. Long-term debt amounted to $369.40 million, flat sequentially.
During the September end quarter, the company repurchased 458,000 of its shares for $91.2 million and paid out $15.4 million in cash dividends. Capital expenditures totaled $29.8 million.
Q4 Guidance
For fourth-quarter 2020, Insperity projects adjusted earnings in the range of 20-38 cents per share. The current Zacks Consensus Estimate of 22 cents lies within the guidance range.
Adjusted EBITDA is anticipated between $20.5 million and $30 million. Average WSEEs is expected in the range of 236,500-238,000.
2020 Guidance
For 2020, Insperity revised its guidance for adjusted EBITDA and average WSEs.
Adjusted EBITDA is anticipated in the range of$271-$281 million compared with the prior guidance of $235-$255 million.
Average WSEEs are expected in the range of 233,500-234,000 compared with the prior guidance of 228,500-233,200.
Equifax (EFX - Free Report) reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and rising 26.4% on a year-over-year basis. The reported figure exceeded the company’s guidance of $1.30-$1.40.
The Interpublic Group of Companies (IPG - Free Report) reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and rose 8.2% on a year-over-year basis.
IQVIA Holdings (IQV - Free Report) reported solid third-quarter 2020 adjusted earnings per share of $1.63, which beat the consensus mark by 8% and inched up 1.9% on a year-over-year basis. The reported figure was above the guidance of $1.47-$1.55.
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With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
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Insperity (NSP) Q3 Earnings Beat Estimates, Stock Up 2.5%
Insperity, Inc. (NSP - Free Report) reported better-than-expected third-quarter 2020 results. Stock price increased 2.5% since earnings release owing to strong 2020 guidance. The company projects adjusted earnings in the band of $4.35-4.53 compared with the prior guidance of $3.67-4.04 per share. The updated guidance is above the current Zacks Consensus Estimate of $3.91.
So far this year, shares of Insperity have lost 1.3% compared with 21.1% decline of the industry it belongs to.
Adjusted earnings of 51 cents per share beat the consensus mark by 70% but declined 19.1% year over year. Revenues of $1007.8 million also surpassed the consensus estimate by 3%, but fell 3.4% year over year. The downfall was due to the FICA deferral program instituted as part of the CARES Act.
The average number of worksite employees paid per month of 231,750 inched up 1.7% sequentially, driven by worksite employees (WSEEs) hired or returning to work outpacing layoffs, client retention for both Q2 and Q3 remaining at our historical level of 99% and addition of WSEEs from solid new client sales throughout the pandemic.
Operating Results
Gross profit of $185 million increased 8% from the year-ago quarter’s figure. Results were driven by higher-than-expected paid WSEEs and pricing combined with significant favorable results in benefits and workers’ compensation costs. Gross margin of 18.4% improved from 16.3% in the year-ago quarter. Gross profit per worksite employee per month increased 12.7% year over year to $266.
Adjusted EBITDA was up 12.5% year over year to $57.5 million. Adjusted EBITDA margin of 5.7% improved from 4.9% in the year-ago quarter. Adjusted EBITDA per worksite employee per month increased 16.9% to $83.
Insperity, Inc. Price, Consensus and EPS Surprise
Insperity, Inc. price-consensus-eps-surprise-chart | Insperity, Inc. Quote
Operating expenses increased 15.1% year over year to $156.3 million. Operating expenses per worksite employee per month increased 19.7% to $225.
Operating income decreased 17.2% year over year to $28.7 million. Operating income per worksite employee per month fell 14.6% to $41.
Balance Sheet & Cash Flow
Insperity exited third-quarter 2020 with adjusted cash, cash equivalents and marketable securities of $212.7 million compared with $268.97 million at the end of the prior quarter. Long-term debt amounted to $369.40 million, flat sequentially.
During the September end quarter, the company repurchased 458,000 of its shares for $91.2 million and paid out $15.4 million in cash dividends. Capital expenditures totaled $29.8 million.
Q4 Guidance
For fourth-quarter 2020, Insperity projects adjusted earnings in the range of 20-38 cents per share. The current Zacks Consensus Estimate of 22 cents lies within the guidance range.
Adjusted EBITDA is anticipated between $20.5 million and $30 million. Average WSEEs is expected in the range of 236,500-238,000.
2020 Guidance
For 2020, Insperity revised its guidance for adjusted EBITDA and average WSEs.
Adjusted EBITDA is anticipated in the range of$271-$281 million compared with the prior guidance of $235-$255 million.
Average WSEEs are expected in the range of 233,500-234,000 compared with the prior guidance of 228,500-233,200.
Currently, Insperity carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
Equifax (EFX - Free Report) reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and rising 26.4% on a year-over-year basis. The reported figure exceeded the company’s guidance of $1.30-$1.40.
The Interpublic Group of Companies (IPG - Free Report) reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and rose 8.2% on a year-over-year basis.
IQVIA Holdings (IQV - Free Report) reported solid third-quarter 2020 adjusted earnings per share of $1.63, which beat the consensus mark by 8% and inched up 1.9% on a year-over-year basis. The reported figure was above the guidance of $1.47-$1.55.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
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