Insperity Inc soars after beating Q4 expectations

Insperity Inc (NYSE:NSP) has released positive Q4 results today

Insperity Inc
Insperity Inc

Provider of human resources and business performance for a wide range of businesses, Insperity Inc (NYSE:NSP), has released Q4 and 2017 results today. In Q4, the company’s performance was better than expected. Its adjusted EPS was $0.55 versus a market consensus of $0.46. This has caused investor sentiment to improve significantly, with the company’s stock price rising by as much as 4%.

For the full year, adjusted EPS was up 37% to $2.45. Again, this was ahead of expectations and indicates that the company’s strategy appears to be working well.

The results represent a record for Insperity. It enjoyed success in areas such as client retention, which was a key part of its strategy. Its Q4 revenue was boosted by a 10% increase in the average number of worksite employees paid per month. This was due to new client sales. In turn, they were driven by an increase in the number of trained Business Performance Advisors. Alongside high client retention rates, this helped to generate greater sales for the company.

The company also benefitted in the fourth quarter from an increase in overall pricing. The company believes that a higher starting point of paid worksite employees in January means that further EPS growth could be ahead in 2018.

In my view, Insperity is making good progress with its strategy. It has been able to maintain client retention in what is continuing to be a competitive marketplace. Trading conditions have also been generally favourable, and I would expect this situation to continue over the medium term as the wider economy seems to be performing well.

Therefore, I’m bullish on the future prospects for the business. Sure, its shares may no longer be as cheap as they once were after a 62% gain in the last year. But with a mix of resilient trading conditions and further investment in its operations, its financial performance could continue to improve and have a positive impact on its stock price.

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Robert Stephens is a CFA Charterholder and works as an Equity Analyst. He is a keen private investor and has bought and sold stocks for 15 years, investing in a range of sectors and markets. He has previously written for Seeking Alpha and The Motley Fool, and now runs his own business. If you would like to contact Robert, please email or contact him via one of the other methods on the 'Contact Us' page