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Insperity Inc (NSP)
NYSE:NSP
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Insperity
(NYSE:NSP)77Outperform
Positive Factors
Negative Factors
Investment Uncertainty
The $150M Workday investment presents new uncertainty in the model, and analysts argue the payback period may occur outside the medium-term investment horizon.
Medical Costs
Elevated medical cost trend in 2025 could spur pricing sensitivity, which presents lower margin for error.
SMB Hiring
Insperity has encountered the dual headwinds of softer SMB hiring and normalization from pandemic pull-forward of growth.
Insperity (NSP) vs. S&P 500 (SPY)
Market Cap
$3.19B
Dividend Yield2.77%
Average Volume (3M)459.39K
Price to Earnings (P/E)35.8
Beta (1Y)1.26
Revenue Growth1.47%
EPS Growth-45.91%
CountryUS
Employees4,500
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)2.39
Shares Outstanding37,230,175
10 Day Avg. Volume412,608
30 Day Avg. Volume459,392
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.48
Price to Cash Flow (P/CF)1.30
P/FCF Ratio1.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$93.50Price Target Upside8.65% Upside
Rating ConsensusHold
Number of Analyst Covering3
Insperity Business Overview & Revenue Model
Company DescriptionInsperity, Inc. is a leading provider of human resources and business performance solutions for small and medium-sized businesses. Operating primarily in the United States, Insperity offers a wide range of services including human capital management, payroll and employment administration, employee benefits, and risk management. The company assists businesses in optimizing their performance by delivering comprehensive HR solutions that address key administrative and strategic needs, thereby enabling clients to focus on core business operations.
How the Company Makes MoneyInsperity generates revenue primarily through its human resources outsourcing services, specifically by operating as a Professional Employer Organization (PEO). The company enters into co-employment relationships with its clients, allowing them to manage employee-related administrative tasks on behalf of the clients. This includes handling payroll processing, benefits administration, tax filing, and compliance with employment laws. Insperity charges its clients service fees based on the number of employees managed and the complexity of services provided. Additionally, Insperity earns revenue by negotiating and providing access to employee benefit plans and insurance products, where they may receive commissions or service fees from insurance carriers. Key partnerships with benefit providers and technology vendors also contribute to Insperity's ability to offer a robust suite of services that attract and retain clients.
Insperity Financial Statement Overview
Summary
Insperity shows strong revenue growth and a robust balance sheet with reduced leverage. Cash flow generation is strong, supporting financial flexibility despite some profitability margin pressures.Income Statement
Insperity demonstrated strong revenue growth with a consistent increase from $4.31 billion in 2019 to $6.49 billion in 2023. Gross profit margin is healthy at around 16% based on recent annual data. However, net profit margin decreased slightly from 3.5% in 2019 to 2.6% in 2023, indicating some pressure on profitability. EBIT and EBITDA margins show efficient operations, although there's a slight decline over the years.85
Very Positive
Balance Sheet
The company's debt-to-equity ratio decreased significantly, indicating improving leverage and lower financial risk, as equity levels increased. Return on equity (ROE) was strong in recent years, signifying effective use of equity. The equity ratio has also improved, reflecting a healthier balance sheet with better asset coverage by equity.78
Positive
Cash Flow
Operating cash flow has shown significant improvement, indicating strong cash generation capability. Free cash flow growth is positive, supporting potential reinvestment or shareholder returns. The operating cash flow to net income ratio is consistently above 1, which is a positive indicator of cash-generating efficiency. Free cash flow to net income ratio highlights robust cash flow relative to net earnings.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 6.58B | 6.49B | 5.94B | 4.97B | 4.29B | Gross Profit |
| 1.05B | 1.04B | 1.01B | 820.10M | 806.85M | EBIT |
| 117.00M | 218.55M | 250.24M | 173.33M | 194.69M | EBITDA |
| 142.00M | 294.92M | 300.29M | 214.32M | 228.47M | Net Income Common Stockholders |
| 91.00M | 171.38M | 179.35M | 124.08M | 138.24M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.05B | 708.78M | 765.90M | 607.60M | 589.38M | Total Assets |
| 2.60B | 2.12B | 2.04B | 1.75B | 1.58B | Total Debt |
| 435.00M | 426.89M | 424.99M | 433.59M | 433.69M | Net Debt |
| -604.00M | -265.98M | -307.84M | -142.22M | -121.16M | Total Liabilities |
| 2.50B | 2.03B | 1.96B | 1.75B | 1.54B | Stockholders Equity |
| 97.00M | 93.62M | 81.28M | -1.77M | 44.13M |
| Cash Flow | Free Cash Flow | |||
| 482.00M | 158.37M | 317.36M | 227.25M | 248.19M | Operating Cash Flow |
| 520.00M | 198.49M | 347.69M | 260.15M | 346.35M | Investing Cash Flow |
| -38.00M | -21.73M | -32.12M | -31.01M | -98.62M | Financing Cash Flow |
| -173.00M | -155.01M | -141.15M | -208.07M | -53.58M |
Insperity Technical Analysis
Positive
86.06
Price Trends
79.90
Positive
80.23
Positive
86.16
Negative
Market Momentum
2.15
Positive
57.42
Neutral
43.97
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NSP, the sentiment is Positive. The current price of 86.06 is above the 20-day moving average (MA) of 84.00, above the 50-day MA of 79.90, and below the 200-day MA of 86.16, indicating a neutral trend. The MACD of 2.15 indicates Positive momentum. The RSI at 57.42 is Neutral, neither overbought nor oversold. The STOCH value of 43.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NSP.
Insperity Risk Analysis
Insperity disclosed 22 risk factors in its most recent earnings report. Insperity reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Insperity Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $54.73B | 31.98 | 46.16% | 2.58% | 4.18% | 5.67% | |
77 Outperform | $3.19B | 35.79 | 95.48% | 2.77% | 1.47% | -45.91% | |
77 Outperform | $127.53B | 32.70 | 83.72% | 1.83% | 7.09% | 11.51% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
61 Neutral | $2.88B | 17.17 | 9.86% | ― | -7.88% | -14.39% | |
61 Neutral | $3.62B | 21.10 | 235.37% | 1.37% | 1.67% | -47.56% | |
60 Neutral | $5.62B | 22.51 | 16.96% | 3.96% | -9.33% | -37.06% |
* Industrials Sector Average
Performance Comparison
NSP
Insperity
86.06
-12.34
-12.54%
ADP
Automatic Data Processing
310.43
70.05
29.14%
ASGN
ASGN
65.44
-37.08
-36.17%
PAYX
Paychex
152.10
34.46
29.29%
RHI
Robert Half
55.45
-22.17
-28.56%
TNET
TriNet Group
74.86
-49.24
-39.68%
Insperity Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: 23.65% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong sales and client retention, along with progress in the Workday strategic partnership. However, challenges included a decline in paid worksite employees and increased operating expenses. The sentiment was balanced with optimism for growth in 2025.Highlights
Strong Sales and Client Retention
The fall sales and client retention campaign was successful, resulting in a 37% increase in worksite employees paid from new clients compared to Q4 2023, and client retention averaged 99% for the quarter.
Workday Strategic Partnership Progress
Significant milestones expected in the Workday partnership, with the Insperity corporate tenant scheduled for launch on April 1. The partnership is expected to drive growth and profitability.
Improved Large Account Retention
Attrition from terminating accounts in the larger account segments was down 63% and 40% compared to 2024 and 2023 respectively, indicating improved service levels and client satisfaction.
Increased Gross Profit Per Worksite Employee
Gross profit per worksite employee per month was $285 in 2024, a 3% increase over 2023.
Lowlights
Decline in Paid Worksite Employees
The average number of paid worksite employees decreased by 2% from Q4 2023, reflecting weak client hiring during the quarter.
Increased Operating Expenses
Q4 operating expenses increased 17% over Q4 2023, mainly due to investments in the Workday strategic partnership.
Flat Net Hiring in 2024
Net growth in the client base was nearly flat for the year, marking the lowest level of hiring by clients in at least the last twenty years.
Company Guidance
During the Insperity Fourth Quarter 2024 Earnings Conference Call, key financial metrics were highlighted, including an adjusted EPS of $0.05 per share and adjusted EBITDA of $23 million for Q4 2024. The company experienced a 2% decrease in paid worksite employees from the previous year, totaling 393,093, but saw a 37% increase in worksite employees from new clients and achieved a client retention rate of 99%. Gross profit per worksite employee was $235 per month in Q4, consistent with the previous year, despite a similar 2% decline in total gross profit. Operating expenses rose by 17% over Q4 2023, largely due to investments in the Workday strategic partnership. For the full year 2024, gross profit per worksite employee per month increased by 3% to $285, with operating expenses rising by 14%. Adjusted EBITDA for the year reached $270 million, while adjusted EPS stood at $3.58, surpassing initial guidance. The company also returned $22 million to shareholders through dividends and repurchased 146,000 shares for $12 million in Q4. Looking ahead, Insperity provided 2025 guidance with expected worksite employee growth of 2% to 4%, adjusted EBITDA between $240 million and $285 million, and adjusted EPS ranging from $3.10 to $3.95. The call emphasized an optimistic outlook for 2025, supported by a successful fall sales campaign and the ongoing Workday strategic partnership, which is anticipated to enhance growth and profitability.Insperity Corporate Events
Executive/Board Changes
Insperity CFO Douglas Sharp to Retire in 2024
Neutral
Nov 21, 2024
Insperity, Inc. announced the retirement of its CFO, Douglas S. Sharp, effective November 15, 2024, followed by a consulting agreement to assist in the transition of his duties until March 31, 2025. Sharp will receive $10,000 monthly and has agreed not to compete with Insperity or solicit its employees for two years post-consulting.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.