Insperity Rewards Shareholders with Special Dividend - Analyst Blog

Human resource and business solutions provider Insperity Inc. (NSP) recently announced a special cash dividend of $2 per share to be paid on Dec 26 to shareholders of record as of Dec 15. This disbursement comes in addition to the quarterly dividend payment of 19 cents per share announced on Nov 14. Such rewards will surely boost investors' confidence in the stock.

This is not the first time Insperity has paid such special dividends -- the last time was in Dec 2012 when it paid $1 a share.

The special dividend was primarily supported by continued solid operational performance. Insperity delivered positive surprises in the last four quarters with an average beat of 15.5%.

The company also increased its quarterly dividend six times since the inception of the program in 2005. The program is also expected to return nearly $90 million to Insperity investors in 2014. The decision to return value as well as a portion of capital is based on Insperity's strong liquidity position and positive free cash flow generation capabilities.

This apart, the board had approved a 1.9 million share repurchase program, which includes approximately 693k shares authorized in Sep 2014. These efforts not only retain investor confidence but also attract potential investors.

Now let's have a look at how Insperity performed in the third quarter of 2014. Cash and marketable securities were $225.4 million versus $212.3 million in the prior quarter. Insperity did not carry any long-term debt balance. We believe that with a sound dividend policy and strong cash position, Insperity will continue rewarding its shareholders in the quarters ahead.

Insperity recorded earnings per share of 33 cents, which came ahead of the Zacks Consensus Estimate of 23 cents. Revenues grew 3.8% year over year to $560.3 million. The year-over-year improvement was attributed to higher average paid worksite employees (up 1.8%) and higher revenues per worksite employee (up 2%).

Given a debt-free balance sheet, we think the move makes sense. We are also positive on Insperity's recurring revenue model, higher worksite employees, and software-as-a-service business model.

However, competition from Automatic Data Processing Inc. (ADP), Paychex Inc. (PAYX) and ManpowerGroup Inc. (MAN) remains a headwind. Moreover, the company provided a tepid full-year guidance, which will remain an overhang on the stock.

Currently, Insperity has a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
INSPERITY INC (NSP): Free Stock Analysis Report
 
AUTOMATIC DATA (ADP): Free Stock Analysis Report
 
MANPOWER INC WI (MAN): Free Stock Analysis Report
 
PAYCHEX INC (PAYX): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research