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Insperity (NSP) Stock Down 9.4% Despite Q4 Earnings Beat

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Insperity, Inc.(NSP - Free Report) reported better-than-expected fourth-quarter 2020 results. Despite such encouraging results, shares of the company have lost 9.4% since its earnings release.

Adjusted earnings of 49 cents per share beat the consensus mark by 63.3% but decreased 14% year over year. Revenues of $1.06 billion also surpassed the Zacks Consensus Estimate by 0.8% but decreased 1.7% year over year.

The average number of worksite employees paid per month of 239,232 inched up 3% sequentially, driven by worksite employees paid from new sales, client retention and net gains in the company’s client base.

Over the past year, shares of Insperity have gained 10% compared with 15.5% rise of the industry it belongs to.

 

Operating Results       

Gross profit of $167.6 million increased 3.5% from the year-ago quarter. Gross margin of 15.9% improved from 15.1% in the year-ago quarter. Gross profit per worksite employee per month increased 5.4% year over year to $233.

Adjusted EBITDA was down 7.1% year over year to $37.9 million. Adjusted EBITDA margin of 3.5% declined from 3.8% in the year-ago quarter. Adjusted EBITDA per worksite employee per month decreased 5.4% to $53.

Operating expenses increased 19.1% year over year to $159.8 million. Operating expenses per worksite employee per month increased 21.9% to $223.

Operating income decreased 72.2% year over year to $7.71 million. Operating income per worksite employee per month fell 71.1% to $11.

Insperity, Inc. Price, Consensus and EPS Surprise

Insperity, Inc. Price, Consensus and EPS Surprise

Insperity, Inc. price-consensus-eps-surprise-chart | Insperity, Inc. Quote

Balance Sheet & Cash Flow

Insperity exited fourth-quarter 2020 with adjusted cash, cash equivalents and marketable securities of $212.06 million compared with $212.7 million at the end of the prior quarter. Long-term debt amounted to $369.40 million, flat sequentially.

During full-year 2020, the company repurchased 1.4 million shares for $99.4 million and paid out $61.9 million in cash dividends. Capital expenditures totaled $98.2 million.

Q1 Guidance

For first-quarter 2021, Insperity projects adjusted earnings in the range of $1.37-$1.72 per share. The current Zacks Consensus Estimate of $1.59 lies within the guided range. Adjusted EBITDA is anticipated between $84 million and $103 million. Average WSEEs is expected in the range of 232,100-234,400.

2021 Guidance

For 2021, the company projects adjusted earnings in the band of $3.27-4.20. The current Zacks Consensus Estimate of $3.86 lies within the guided range. Adjusted EBITDA is anticipated in the range of $225-$275 million. Average WSEEs are expected in the range of 238,900-248,300.

Currently, Insperity carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Rollins’ (ROL - Free Report) fourth-quarter 2020 adjusted earnings of 13 cents per share came ahead of the consensus estimate as well as the year-ago figure by 18.2%. Revenues of $536.3 million beat the consensus mark by 1.7% and improved 6% year over year.

IHS Markit’s  fourth-quarter fiscal 2020 adjusted earnings per share of 72 cents beat the Zacks Consensus Estimate by 7.5% and increased 11% on a year-over-year basis. Total revenues came in at $1.11 billion, marginally missing the consensus mark and declining 1% from the year-ago quarter on a reported basis.

Automatic Data Processing’s (ADP - Free Report) second-quarter fiscal 2021 adjusted earnings per share of $1.52 beat the consensus mark by 17.8% and were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and improved 0.7% year over year.

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