Insperity, Inc.NSP is set to report third-quarter 2015 results on Nov 2. Last quarter, the company reported a positive surprise of 6.45%. Moreover, it has delivered an average positive earnings surprise of 25.66% in the trailing four quarters.
Let's see how things are shaping up for this announcement.
Factors to Consider
Insperity reported strong results last quarter with both top and bottom lines improving significantly on the year over year basis.
We believe that the company is likely to benefit from an increase in worksite employees (WSE). In addition, lower health care costs and payroll taxes along with increased contribution from Strategic Business Units (SBU) are likely to drive earnings, going ahead. Moreover, as workforce synchronization continues to gain traction with mid-market clients, it will likely be of benefit for Insperity.
However, the sluggish global macro environment can lead to headcount reductions at client companies. An increase in health care costs does not bode well for Insperity ashealth care costs are one of the major components of operating expenses. Furthermore, client attrition amid increasing competition from the likes of Automatic Data Processing Inc. ADP and TriNet Group, Inc. TNET remain concerns.
Our proven model does not conclusively show that Insperity is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Insperity currently has a 0.00% ESP because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 46 cents.
Zacks Rank: Insperity's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stock to Consider
Here is a stock that you may consider as our model shows it has the right combination of elements to post an earnings beat this quarter:
Nexstar Broadcasting Group, Inc. NXST has an Earnings ESP of +8.93% and a Zacks Rank #2 (Buy).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.