It has been about a month since the last earnings report for Insperity, Inc. (NSP - Free Report) . Shares have added about 17.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is NSP due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Insperity Beats on Q1 Earnings, Raises 2018 Guidance
Insperity reported solid first-quarter 2018 results, beating the Zacks Consensus Estimate on both counts.
Adjusted earnings of $1.41 per share surpassed the consensus mark by 27 cents and increased a massive 53% year over year. The uptick can be attributed to worksite employee and gross profit growth. The bottom line also surpassed the guided range of $1.12-$1.16 per share.
Revenues came in at $1.04 billion exceeding the consensus mark by $26 million and improved 15% year over year. Strength across new sales, client retention and pricing led to top-line growth.
Other Quarterly Numbers
Average number of worksite employees paid per month increased 12% to 195.7 million.
Insperity’s gross margin expanded 160 basis points (bps) from the year-ago quarter to 19.7%. Gross profit per worksite employee per month increased 11.5% to $340. The improvement was backed by strong pricing and decrease in primary direct costs.
Adjusted EBITDA was up 34% year over year to $83.8 million. Adjusted EBITDA per worksite employee per month increased 19% to $143.
Adjusted operating expenses increased 19% year over year to $125.7 million. Adjusted operating expenses per worksite employee per month grew 6% to $214.
Balance Sheet & Share Repurchase
Insperity exited the first quarter with adjusted cash, cash equivalents and marketable securities of $87.5 million compared with $61.1 million at the end of the fourth quarter of 2017. Long term debt was $104.4 million, in line with fourth-quarter figure. The company repurchased roughly 131,000 shares at $8.6 million and paid dividends totaling $8.4 million.
For second-quarter 2018, Insperity projects adjusted earnings in the range of 59-63 cents per share, representing a year-over-year increase of 44-54%. The guided range is well above the Zacks Consensus Estimate, which is currently pegged at 52 cents.
Adjusted EBITDA is anticipated to increase 23-29%, in a range of $41-$43 million. Average worksite employees (WSEs) are expected in a range of 202,000 to 203,700, representing 12-13% growth.
Insperity raised its guidance for 2018. The company now projects adjusted earnings between $3.36 per share and $3.44 per share, implying growth of 37-40%, above the previously guided range of $2.96-$3.08 per share. The consensus estimate is pegged lower at $3.04.
Adjusted EBITDA is projected to grow 23-25%, in a range of $218-$223 million. The prior guided range was $197 million to $204 million. Average WSEs are expected to be in the 206,400 to 208,400 bracket, representing 13-14% growth. The earlier expected range was between 203,700 and 207,400.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 14.6% due to these changes.
Insperity, Inc. Price and Consensus
At this time, NSP has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise NSP has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.