) reported adjusted earnings of 24 cents per share which came
ahead of the Zacks Consensus Estimate by a penny. However, on a
year-over-year basis, earnings were down 48.9%.
Although Insperity's fourth-quarter revenues of $557.1 million
increased 4.6% on a year-over-year basis, it lagged the Zacks
Consensus Estimate of $561 million. The year-over-year
improvement was attributed to higher average paid worksite
employees. The company reported average client retention of 99%
during the quarter. However, net hiring from its clients was
Insperity's gross margins were down 141 basis points from the
year-ago quarter to 16.2% primarily due to
higher-than-anticipated healthcare costs.
The company's operating expenses increased 7.1% from the
year-ago quarter's costs related to training of Business
Performance Advisors and the reform strategy regarding healthcare
related costs. Operating margins came in at 1.2% compared to 2.9%
in the year-ago period primarily due to higher operating
Insperity's adjusted net income decreased from $11.9 million
or 47 cents per share reported in the year-ago quarter to $6.2
million or 24 cents per share.
Insperity exited the fourth quarter with cash, marketable
securities and restricted cash of $277.7 million compared to
$259.6 million in the previous quarter. The company has paid
dividends of $17.4 million and repurchased shares worth $17.2
million during fiscal 2013.
Insperity expects gross profit per worksite employee per month
in the range of $247-$241 for first-quarter 2014 and $248-$258
for fiscal 2014. The company expects operating expenses in the
range of $90.5-$91.5 million for the first quarter and $362.5 -
$367.5 million for fiscal 2014.
For fiscal 2014, Insperity expects its earnings per share in
the range of $1.16 to $1.60, below the Zacks Consensus Estimate
of $1.70 per share.
Insperity provides human resources as well as business
solutions to small and medium business to help them perform
better. The company reported mixed fourth-quarter results wherein
the top line lagged the Zacks Consensus Estimate, but the bottom
line scraped past the same. Margins were also impacted by
Nonetheless, we believe management's initiatives to expand the
number of Business Performance Advisors and implement healthcare
reform strategy will be beneficial in the long run. Moreover, the
company's software-as-a-service and other adjacent business
services are also gaining traction which are expected to improve
the 2014 results.
A debt-free balance sheet, share repurchases and dividend
payouts are positives, but increasing expenses, stiff competition
Automatic Data Processing Inc.
Manpower Group Inc.
) are concerns.
Currently, Insperity has a Zacks Rank #3 (Hold).
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