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Insperity (NSP) to Report Q2 Earnings: Will It Surprise?
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Insperity, Inc. (NSP - Free Report) is set to report second-quarter 2016 results on Aug 1. Last quarter, the company reported a positive surprise of 10.07%. However, it has delivered an average negative earnings surprise of 0.25% over the trailing four quarters.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Insperity is well placed to benefit from the booming professional employer organization (PEO) industry. Improved client retention, a diversified product portfolio, growth in worksite employees and strength in its ancillary products should drive top-line growth in the to-be-reported quarter.
In May, the company raised its quarterly dividend by 13.6% to 25 cents per share and expanded its share repurchase authorization by 1 million.
However, the company has not achieved the desired levels despite increasing average worksite employees (WSEs), which remain a concern. In addition, a sluggish global macro environment can lead to headcount reductions at client companies. An increase in health care costs does not bode well for Insperity as health care costs are one of the major components of operating expenses. Furthermore, client attrition amid increasing competition from the likes of Automatic Data Processing Inc. (ADP - Free Report) and TriNet Group, Inc. (TNET - Free Report) remain concerns.
For the second quarter of 2016, Insperity projects adjusted earnings in a range of 54 cents -62 cents a share. Adjusted EBITDA is projected to be $24 million to $27 million and average WSE is expected in a range of 163K to 164K, representing growth of 14 to 15%.
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 48 cents.
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 stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stock to Consider
Here is a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:
General Dynamics Corp. (GD - Free Report) has an Earnings ESP of +2.17% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Insperity (NSP) to Report Q2 Earnings: Will It Surprise?
Insperity, Inc. (NSP - Free Report) is set to report second-quarter 2016 results on Aug 1. Last quarter, the company reported a positive surprise of 10.07%. However, it has delivered an average negative earnings surprise of 0.25% over the trailing four quarters.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Insperity is well placed to benefit from the booming professional employer organization (PEO) industry. Improved client retention, a diversified product portfolio, growth in worksite employees and strength in its ancillary products should drive top-line growth in the to-be-reported quarter.
In May, the company raised its quarterly dividend by 13.6% to 25 cents per share and expanded its share repurchase authorization by 1 million.
However, the company has not achieved the desired levels despite increasing average worksite employees (WSEs), which remain a concern. In addition, a sluggish global macro environment can lead to headcount reductions at client companies. An increase in health care costs does not bode well for Insperity as health care costs are one of the major components of operating expenses. Furthermore, client attrition amid increasing competition from the likes of Automatic Data Processing Inc. (ADP - Free Report) and TriNet Group, Inc. (TNET - Free Report) remain concerns.
For the second quarter of 2016, Insperity projects adjusted earnings in a range of 54 cents -62 cents a share. Adjusted EBITDA is projected to be $24 million to $27 million and average WSE is expected in a range of 163K to 164K, representing growth of 14 to 15%.
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 48 cents.
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 stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stock to Consider
Here is a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:
General Dynamics Corp. (GD - Free Report) has an Earnings ESP of +2.17% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>