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Will Insperity (NSP) Surprise Estimates in Q4 Earnings?

Insperity, Inc.NSP is set to report fourth-quarter 2015 results on Feb 12. Last quarter, the company reported a positive surprise of 4.35%. Moreover, it has delivered an average positive earnings surprise of 15.88% in the trailing four quarters.

Let's see how things are shaping up for this announcement.

Factors to Consider

Insperity is expected to benefit from increase in worksite employees (WSE) due to higher retention and better expense management. In addition, lower health care costs and payroll taxes along with increased contribution from Strategic Business Units (SBU) are likely to be growth drivers. Moreover, as workforce synchronization continues to gain traction with mid-market clients, it will likely be of benefit for Insperity.

In December, Insperity had announced a Dutch tender offer under which the company will repurchase $125 million worth of stock. The company recently gave updates for the same. Insperity will now be purchasing shares worth $143.1 million that is approximately 12.4% of its common stock issued and outstanding as of Jan 11, 2016.

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.

Earnings Whispers

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 32 cents.

Zacks Rank : Though Insperity's Zacks Rank #1 (Strong Buy) increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

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:

Vornado Realty Trust VNO has an Earnings ESP of +4.65% and a Zacks Rank #3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

VORNADO RLTY TR (VNO): Free Stock Analysis Report

INSPERITY INC (NSP): Free Stock Analysis Report

AUTOMATIC DATA (ADP): Free Stock Analysis Report

TRINET GROUP (TNET): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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