Insperity Allies with ICBA - Analyst Blog

Human resource and business solutions provider Insperity Inc. NSP was selected by Independent Community Bankers of America (ICBA) as their Preferred Service Provider. ICBA represents 6,500 community banks operating in the U.S.

The alliance therefore allows Insperity to offer its human resource, financial and pay roll-related services to a wider number of clients. Likewise, the community banks selecting Insperity's products and services will now be able to consolidate their administrative operations and focus on providing enhanced services to their customers instead.

Insperity provides human resources as well as business solutions to small and medium businesses to help them perform better. We expect the current partnership with ICBA to improve the company's growth prospects.

It is worth noting that in the last-reported quarter, Insperity's revenues increased 4.1% on a year-over-year basis. The improvement was attributed to higher average paid worksite employees (up 2.3%) and higher revenue per worksite employee (up 1.7%). The company reported average client retention of 87.0% during the quarter. Nonetheless, higher-than-expected expenses impacted the bottom line.

We believe management's initiatives to expand the number of Business Performance Advisors and implement a healthcare reform strategy will be beneficial in the long run. Moreover, the company's software-as-a-service and other adjacent business services are gaining traction and are expected to help improve 2014 results.

Although the company has a debt-free balance sheet, competition from Automatic Data Processing Inc. ADP, Paychex Inc. PAYX and ManpowerGroup Inc. MAN remain the headwinds. Moreover, the company provided a tepid full year guidance, which will remain an overhang on the stock.

Currently, Insperity has a Zacks Rank #5 (Strong Sell).