A month has gone by since the last earnings report for Insperity, Inc.NSP . Shares have added about 12.7% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Insperity delivered fourth-quarter 2017 adjusted earnings of 55 cents per share, which improved 89.7% year over year. The figure also beat the Zacks Consensus Estimate by 9 cents.
Insperity's revenues of $826.5 million increased 13.4% on a year-over-year basis and surpassed the Zacks Consensus Estimate of $814.1 million. Top-line growth can be attributed to 9.8% increase in average number of worksite employees paid per month.
2017 at a Glance
In 2017, earnings were $2.45 per share, up 37% over 2016. Revenues of $3.30 billion increased 12.2% on a year-over-year basis.
Average number of worksite employees paid per month increased 10% over 2016. Additionally, worksite employee retention was 85% in 2017.
Insperity's gross margin expanded 210 basis points (bps) from the year-ago quarter to 17.3%. Gross profit per worksite employee per month increased 17.3% to $251.
Adjusted EBITDA soared 67% year over year to $38.5 million. EBITDA per worksite employee per month surged 40.5% to $52, primarily driven by efficient price management and improved performance in benefits, workers' compensation and payroll tax areas.
Adjusted operating expenses increased 23.2% year over year to $118.4 million. Adjusted operating expenses per worksite employee per month grew 11.8% to $208.
Balance Sheet & Share Repurchase
Insperity exited 2017 with adjusted cash, cash equivalents and marketable of $61.1 million compared with $44.9 million as on Dec 31, 2016.
The company repurchased roughly 901,000 shares at $38.7 million, issued dividends totaling $65.8 million, including both regular quarterly dividend and the $1.00 per share special dividend declared in December.
Capital expenditure of $33.3 million was incurred in 2017 compared with $34 million in the past year.
For first-quarter 2018, Insperity projects adjusted earnings in the range of $1.12-$1.16 per share, representing a year-over-year increase of 22-26%.
Adjusted EBITDA is anticipated to increase 10-13%, in a range of $69-$71 million. Average worksite employees (WSEs) are expected in a range of 193,500 to 195,300, representing growth of 11-12%.
For 2018, Insperity projects adjusted earnings between $2.96 and $3.08 per share implying growth of 21-26%.
Adjusted EBITDA is projected to grow 11-15%, in a range of $197-$204 million. Average WSEs are expected to be in the 203,700 to 207,400 bracket, representing growth of 11.5-13.5%.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months. In the past month, the consensus estimate has shifted by 11.6% due to these changes.
Insperity, Inc. Price and Consensus
At this time, NSP has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
NSP has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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