Insperity Beats on Q4 Earnings; Down Y/Y - Analyst Blog
11 Fevereiro 2014 - 1:50PM
Zacks
Insperity Inc. (NSP) reported adjusted earnings
of 24 cents per share which came ahead of the Zacks Consensus
Estimate by a penny. However, on a year-over-year basis, earnings
were down 48.9%.
Quarter Details
Although Insperity’s fourth-quarter revenues of $557.1 million
increased 4.6% on a year-over-year basis, it lagged the Zacks
Consensus Estimate of $561 million. The year-over-year improvement
was attributed to higher average paid worksite employees. The
company reported average client retention of 99% during the
quarter. However, net hiring from its clients was low.
Insperity’s gross margins were down 141 basis points from the
year-ago quarter to 16.2% primarily due to higher-than-anticipated
healthcare costs.
The company’s operating expenses increased 7.1% from the
year-ago quarter’s costs related to training of Business
Performance Advisors and the reform strategy regarding healthcare
related costs. Operating margins came in at 1.2% compared to 2.9%
in the year-ago period primarily due to higher operating
expenses.
Insperity’s adjusted net income decreased from $11.9 million or
47 cents per share reported in the year-ago quarter to $6.2 million
or 24 cents per share.
Insperity exited the fourth quarter with cash, marketable
securities and restricted cash of $277.7 million compared to $259.6
million in the previous quarter. The company has paid dividends of
$17.4 million and repurchased shares worth $17.2 million during
fiscal 2013.
Guidance
Insperity expects gross profit per worksite employee per month
in the range of $247–$241 for first-quarter 2014 and $248–$258 for
fiscal 2014. The company expects operating expenses in the range of
$90.5–$91.5 million for the first quarter and $362.5 – $367.5
million for fiscal 2014.
For fiscal 2014, Insperity expects its earnings per share in the
range of $1.16 to $1.60, below the Zacks Consensus Estimate of
$1.70 per share.
Conclusion
Insperity provides human resources as well as business solutions
to small and medium business to help them perform better. The
company reported mixed fourth-quarter results wherein the top line
lagged the Zacks Consensus Estimate, but the bottom line scraped
past the same. Margins were also impacted by higher-than-expected
expenses.
Nonetheless, we believe management’s initiatives to expand the
number of Business Performance Advisors and implement healthcare
reform strategy will be beneficial in the long run. Moreover, the
company’s software-as-a-service and other adjacent business
services are also gaining traction which are expected to improve
the 2014 results.
A debt-free balance sheet, share repurchases and dividend
payouts are positives, but increasing expenses, stiff competition
from Automatic Data Processing Inc. (ADP),
Paychex Inc. (PAYX) and Manpower Group
Inc. (MAN) are concerns.
Currently, Insperity has a Zacks Rank #3 (Hold).
AUTOMATIC DATA (ADP): Free Stock Analysis Report
MANPOWER INC WI (MAN): Free Stock Analysis Report
INSPERITY INC (NSP): Free Stock Analysis Report
PAYCHEX INC (PAYX): Free Stock Analysis Report
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