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Growing PEO Industry Aids Insperity (NSP) Despite Rising Costs
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Insperity, Inc.’s (NSP - Free Report) revenue diversification helps boost its top line and provides security against market risks. Growth in the PEO industry helps the company to improve its performance. However, a rise in costs could affect its bottom line.
NSP reported mixed first-quarter 2024 results. Adjusted earnings (excluding 19 cents from non-recurring items) of $2.27 per share outpaced the consensus estimate by 7.6% but declined 15% year over year. Revenues of $1.8 billion missed the Zacks Consensus Estimate by a slight margin but increased 1.8% from the year-ago quarter.
How is NSP Doing?
Insperity is a comprehensive human resources and business solutions provider. It offers a variety of HR services through PEO services known as Workforce Optimization and Workforce Synchronization solutions. Diversification in the revenue base not only solidifies consistent top-line growth but also provides a safeguard against risks prevailing in the market.
In 2023, the company achieved total revenues of $6.5 billion, marking 9.2% year-over-year growth, backed by a 3.2% rise in revenues per worksite employee and a substantial 5.8% improvement in the number of paid worksite employees, with an average of 315,072 worksite employees paid per month. This growth in worksite employees is a result of the company's strong sales performance, improved rates of client retention and an upsurge in net hiring of worksite employees by Insperity's client base. We estimate the company’s revenues to increase 3.4% year over year in 2024.
The strengthening PEO industry boosts Insperity’s performance. Growth in the PEO industry’s performance is driven by the improvement in the performance of small and medium-sized businesses, rising costs related to workers’ compensation insurance coverage, workplace safety programs, employee-related complaints, and litigation, and complex regulation of payroll, payroll tax, and employment issues.
In 2023 and 2022, the company repurchased 1.3 million and 770,000 shares for $131.5 million and $69.7 million, respectively, and paid out dividends totaling $84.2 and $77, respectively. In 2021, the company repurchased 716,000 shares for $69.7 million and paid out dividends totaling $144.2 million. Such moves indicate Insperity’s commitment to boosting shareholders’ value and underlining its confidence in business, thereby boosting its bottom line.
NSPis observing an increase in costs as it continues to invest in growth, technology, and product and service offerings. In 2023, total operating costs jumped 7.5% on a year-over-year basis. The same grew 17.7% in 2022 and 5.7% year over year in 2021. As a result, the bottom line is likely to remain under pressure in the future.
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Growing PEO Industry Aids Insperity (NSP) Despite Rising Costs
Insperity, Inc.’s (NSP - Free Report) revenue diversification helps boost its top line and provides security against market risks. Growth in the PEO industry helps the company to improve its performance. However, a rise in costs could affect its bottom line.
NSP reported mixed first-quarter 2024 results. Adjusted earnings (excluding 19 cents from non-recurring items) of $2.27 per share outpaced the consensus estimate by 7.6% but declined 15% year over year. Revenues of $1.8 billion missed the Zacks Consensus Estimate by a slight margin but increased 1.8% from the year-ago quarter.
How is NSP Doing?
Insperity is a comprehensive human resources and business solutions provider. It offers a variety of HR services through PEO services known as Workforce Optimization and Workforce Synchronization solutions. Diversification in the revenue base not only solidifies consistent top-line growth but also provides a safeguard against risks prevailing in the market.
In 2023, the company achieved total revenues of $6.5 billion, marking 9.2% year-over-year growth, backed by a 3.2% rise in revenues per worksite employee and a substantial 5.8% improvement in the number of paid worksite employees, with an average of 315,072 worksite employees paid per month. This growth in worksite employees is a result of the company's strong sales performance, improved rates of client retention and an upsurge in net hiring of worksite employees by Insperity's client base. We estimate the company’s revenues to increase 3.4% year over year in 2024.
The strengthening PEO industry boosts Insperity’s performance. Growth in the PEO industry’s performance is driven by the improvement in the performance of small and medium-sized businesses, rising costs related to workers’ compensation insurance coverage, workplace safety programs, employee-related complaints, and litigation, and complex regulation of payroll, payroll tax, and employment issues.
In 2023 and 2022, the company repurchased 1.3 million and 770,000 shares for $131.5 million and $69.7 million, respectively, and paid out dividends totaling $84.2 and $77, respectively. In 2021, the company repurchased 716,000 shares for $69.7 million and paid out dividends totaling $144.2 million. Such moves indicate Insperity’s commitment to boosting shareholders’ value and underlining its confidence in business, thereby boosting its bottom line.
NSPis observing an increase in costs as it continues to invest in growth, technology, and product and service offerings. In 2023, total operating costs jumped 7.5% on a year-over-year basis. The same grew 17.7% in 2022 and 5.7% year over year in 2021. As a result, the bottom line is likely to remain under pressure in the future.
Zacks Rank & Stocks to Consider
NSP currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Charles River Associates (CRAI - Free Report) and Fiserv (FI - Free Report) .
Charles River Associates currently carries a Zacks Rank of 2 (Buy). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CRAI has a long-term earnings growth expectation of 16%. It delivered a trailing four-quarter earnings surprise of 19.1%, on average.
Fiserv presently carries a Zacks Rank of 2. It has a long-term earnings growth expectation of 14.3%.
FI delivered a trailing four-quarter earnings surprise of 2.3%, on average.