Insperity's Guidance Bodes Well For 2017

Baird’s Mark S. Marcon expressed an incrementally positive stance on Insperity Inc NSP, following the company’s fiscal 2017 guidance, which implies better than expected Worksite Employee (WSE) growth and profitability.

The analyst maintains an Outperform rating on the company, while raising the price target from $74 to $92.

Record Client Retention

Marcon mentioned that Insperity’s client retention reached a record high in 2016, with the momentum carrying into the crucial January/February renewal period, “reflecting the success of its broader suite of product offerings.”

In addition, the company’s sales consultants continued to build well, while the addition of the Workforce Administration offering is expected to expand the target market opportunity, positioning Insperity for success in 2017.

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Q4 Results

The company’s Q4 results were in line with the estimates, driven by robust WSE growth. The EPS came in ahead of expectations, partly driven by a lower tax rate and other expenses.

Client retention stood at 86 percent in 2016, which is a new record, as compared to the previous record of 84 percent in 2015.

The adjusted EBITDA margin for the quarter was also ahead of expectations.

2017 Guidance

For fiscal year 2017, Insperity’s guidance suggest accelerating WSE growth, with better than anticipated profitability.

The company guided to Q1 EPS of $1.78–$1.87, slightly ahead of the estimate and consensus, with adjusted EBITDA of $63 million–$66 million, as compared to the estimate of $65.9 million.

For fiscal 2017, the company guided to EPS of $4.21–$4.42, beating expectations, with adjusted EBITDA of $161 million–$168 million, which was also ahead of the estimate.

At last check, shares of Insperity were up 2.47 percent at $85.05.