It has been about a month since the last earnings report for Insperity, Inc. (NSP - Free Report) . Shares have lost about 9.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Insperity Beats Q2 Earnings & Revenue Estimates
Insperity reported impressive second-quarter 2017 results with both earnings and revenues exceeding expectations. The company reported adjusted diluted earnings of $0.82 per share surpassed the Zacks Consensus Estimate of $0.68 and increased 36.7% over the year-ago quarter.
Revenues of $795.6 million increased 12.5% on a year-over-year basis and topped the Zacks Consensus Estimate of $779.2 million. The year-over-year growth was driven by 10% increase in the average number of paid worksite employees. Revenues per worksite employee per month were up 2% to $1,471
Insperity’s gross margin in the quarter was up 40 basis points (bps) from the year-ago quarter to 16.4%.
Adjusted EBITDA increased 30.3% year over year to $33.3 million, which came ahead of management’s guided range of $27–$29 million. EBITDA per worksite employee per month increased 23.8% in the quarter to $52.
The company’s operating expenses increased 10.7% year over year to $107.6 million due to increase in the average number of trained business performance advisors, and continuing investments in the company’s technology infrastructure, security and development.
Insperity exited the quarter with cash, cash equivalents and marketable securities of $243.8 million compared with $287.9 million as on Dec 31, 2016.
During the second quarter, Insperity repurchased 211,335 shares at a cost of $16.2 million and increased quarterly dividend payout rate by 20%. It bought back 325,903 shares for $25.5 million and paid dividends totaling $11.6 million in the first six months of 2017.
Insperity also provided outlook for the third-quarter and full year 2017.
For third-quarter 2017, Insperity projects adjusted earnings in a range of $0.94 to $1 per share. Adjusted EBITDA is projected in the range of $37.5–$39.5 million and average worksite employees (WSEs) are expected in the range of 187,500 to 188,300, representing growth of 11–11.5%.
For full-year 2017, the company projects adjusted earnings of $4.47–$4.6 per share and adjusted EBITDA in a range of $169–$173 million. Average WSEs are anticipated to be in the 184,000–186,000 bracket, representing growth of 11–12%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
At this time, Insperity's stock has an average Growth Score of C, though it is lagging a lot on the momentum front with a F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Notably, the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.