Zacks Equity Research

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Zack’s Bull of the Day: Insperity Inc

Insperity Inc (NYSE:NSP) has seen its estimates increase due to solid Q4 14 earnings results, beating both the Zacks Consensus Earnings and Revenue estimates, and management increased guidance in 2015 due to higher average worksite employees and higher gross profit correlated to healthcare.  Due to these factors Insperity has become the Zacks Bull of the Day.

This Zacks Rank #1 (Strong Buy) company is engaged in providing an array of human resources and business solutions.  Services offered by Insperity includes, Workforce Optimization in the marketplace, Midmarket Solutions, Performance Management, Expense Management, Time and Attendance, Organizational Planning, Employment Screening, Recruiting Services, Retirement Services, Business Insurance and Technology Services.  The company is headquartered in Kingwood, Texas.

During the most recent earnings announcement, Insperity’s management increased guidance due to three major factors: Management expects a 10-12% year over year increase in average paid Worksite Employees (WSE), adjusted EPS to increase 26-32% to a range of $1.82-$1.92, and adjusted EBITDA is now expected to grow 20-25% year over year.  This news caused the stock to jump over 8% after the announcement, but it is expected to continue to increase due to management’s history of being extremely conservative in their guidance.

Positive Earnings Surprises

The table below shows EPS surprises and the subsequent price appreciation.  As you can see Insperity has consistently beaten the Zacks Consensus Earnings EPS estimates, and has seen solid positive price movements post earnings.  Further, the company has beaten the Zacks Consensus Earnings Estimate for the past 5 consecutive quarters, and has posted an 4 quarter average positive earnings surprise of +21.79%.

Increasing Estimates

Due to their strong Q4 earnings and increased guidance, the Zacks Consensus Earnings Estimates have increased significantly over the past 30 days for Q1 15, and for FY 15; Q1 15 increased from $0.41 to $0.62, and FY 15 rose from $1.31 to $1.71.

Bottom Line

With solid Q4 results, and increased guidance, Insperity has positioned itself for increased earnings and revenue growth in 2015.  According to CEO Paul Sarvadi, “Our successful fall selling and retention campaign has reestablished momentum in growth and profitability and set Insperity up for double digit unit growth in 2015.  Our long-term strategy to offer a wide array of business performance solutions to establish a broader platform for growth is now in place and producing excellent results.”


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