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Insperity Cautiously Faces Clients' Optimism

May 08, 2020 10:36 AM ETInsperity, Inc. (NSP)
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Jenks Jumps


  • Insperity reported first quarter results on May 4th. Its top-line improved. Its bottom line declined. And, as a service provider to small-and-medium-sized businesses, its focus is pandemic.
  • The company also shared results from a client survey focused on the COVID-19 pandemic. The data was somewhat optimistic, perhaps a result of Insperity's demographic targeting.
  • Still, the company, cautiously, decreased its full-year guidance. The level of uncertainty surrounding the pandemic remains high.

During an economic shutdown with high unemployment specifically impacting small-to-medium-sized businesses, it's hardly a surprise to see the share price struggling for a company focused on servicing small-to-medium-sized businesses. Such is the case for Insperity (NYSE:NSP). The HR solutions provider is trading at only 35% of its 52-week high of over $144.

Insperity's troubles didn't actually start with the economic shutdown. It hit its 52-week high in July 2019 before reporting 2019 second quarter results. With each subsequent quarter's report, its share price stair-stepped lower. The culprit of the disappointments was an unusual number of occurrences of large medical claims (defined as $250,000 and above).


In early February 2020, Insperity reported 2019 year-end results and shares, subsequently, traded in the low $70 range. Since that point, shares are down another 30%. However, when Insperity reported 2020 first quarter results on May 4th and updated its full-year guidance, the company adjusted its projections by less than half that rate.

Initial 2020 Guidance

Prior to the pandemic, Insperity expected to prove the fruitfulness of applying data science and analytics to its processes in 2020.

Because its 2019 fall sales campaign had stalled late in the year, it began 2020 with a lower-than-expected starting point in paid worksite employees. As a result of the fall slowdown, the company extended the sales campaign through January. Ultimately, sales recovered and even exceeded campaign goals. Obviously, the push didn't help the 2019 fourth quarter. But, the 2020 first quarter showed promise.

Remarkably, we also boosted future sales activity with a 28% increase in discovery calls and a 40% increase in business profiles.

For the entire year, Insperity projected adjusted EBITDA would fall in a range of $250 million to $274 million compared to $250 million in 2019. But, the bottom line was not expected to show the same growth potential. Net income

This article was written by

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I am a self-taught investor. As a member of an investment club, I provide the majority of research to the club. When I started writing for SA, the club was interested in stocks offering growth at a reasonable price (GARP) and stocks that were undervalued. We have since adopted a dividend growth investing (DGI) strategy. We search for GRAVY - our acronym for "GR"owth "A"bility, "V"alue and "Y"ield. I am very interested in other active investors critiquing my research. I believe this critique will make me a better investor for my own interests as well as the club's.

Analyst’s Disclosure: I am/we are long NSP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I belong to an investment club that owns shares of NSP.

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