Shareholder Friendly Moves Push Insperity to a Strong Buy - Analyst Blog

On Dec 12, Zacks Investment Research upgraded Insperity Inc. (NSP) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The current optimism surrounding the stock can be attributed, to some extent, to the company's recently (Dec 1) announced 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 are likely to boost investors' confidence in the stock.

We believe that the company's sound financial position motivates it to undertake shareholder-friendly moves. Insperity ended the third quarter of 2014 with cash and marketable securities of $225.4 million versus $212.3 million in the prior quarter. Moreover, the company did not carry any long-term debt.

Further, Insperity posted better-than-expected third-quarter results on Nov 3. The company recorded earnings per share of 33 cents, which beat 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%).

Over the last 60 days, all five estimates for the current fiscal moved up, raising the Zacks Consensus Estimate by 8.9% to $1.10. Also, 3 out of 5 estimates for fiscal 2015 were raised, translating into 2.3% rise in the Zacks Consensus Estimate to $1.31 over the same period of time.

Insperity provides human resources as well as business solutions to small and medium-sized businesses to help them perform better. We believe management's initiatives to expand the number of Business Performance Advisors and implement a healthcare reform strategy will be beneficial over the long run. Moreover, the company's software-as-a-service and other adjacent business services are gaining traction, which are expected to improve the 2014 results.

A debt-free balance sheet, share repurchases and dividend payouts are other positives, but rising expenses and competition from Automatic Data Processing Inc. (ADP) and Paychex Inc. (PAYX) remain headwinds.

Currently, Insperity has a Zacks Rank #3 (Hold). Investors can also consider Cross Country Healthcare, Inc. (CCRN) sporting a Zacks Rank #1 (Strong Buy) and is worth buying.