Insperity (NSP) Gains on PEO Industry Strength & Cash Position
Insperity (NSP) is aided by strong balance sheet and strength in the professional employer organization ("PEO") services industry.
Insperity, Inc. NSP is currently benefiting from strength in the professional employer organization (“PEO”) services industry and a strong cash position.
The company recently reported second-quarter 2021 adjusted earnings of 91 cents per share. The bottom line beat the Zacks Consensus Estimate by 40%, but fell 40.9% year over year. Revenues of $1.19 billion surpassed the consensus mark by 7.7% and increased 19.3% year over year.
Notably, the stock has gained 59.5% in the past year compared with 66% rise of the industry it belongs to.
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How is Insperity Doing?
Insperity exited the June quarter with cash and equivalents of $536 million, above the total debt of $369 million. This indicates that the company has sufficient cash to meet debt obligations. Moreover, Insperity does not have any current debt. It's total debt to total capital ratio was 0.81 at the end of second-quarter 2021, lower than the previous quarter’s 0.83. Lower debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is declining and so is the risk of insolvency.
Insperity looks strong on the back of a growing PEO industry, which is currently being driven by growth of small- and medium-sized businesses, increased need of providing employee benefits along with complex regulation of payroll, payroll tax and employment issues. Insperity, being an integrated human resources and business solutions provider, offers a comprehensive suite of HR services solutions through PEO services known as Workforce Optimization and Workforce Synchronization solutions.
Meanwhile, Insperity is bearing the brunt of higher expenses as it continues to invest in growth, technology as well as product and service offerings. During second-quarter 2021, operating expenses increased 11.6% year over year to $164.33 million. Hence, the bottom line is likely to remain under pressure going forward.
Zacks Rank and Other Stocks to Consider
Insperity currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup, Equifax and TransUnion is pegged at 23.1%, 15.2% and 22%, respectively.
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