Insperity (NSP) to Report Q3 Earnings: What's in Store?

Insperity, Inc. NSP is set to report third-quarter 2016 results on Nov 1. Last quarter, the company reported a negative earnings surprise of 25%. It has an average negative earnings surprise of 8.11% over the trailing four quarters, despite beating estimates in two quarters.

Let’s see how things are shaping up for this announcement.

Factors to Consider

The company is well placed to benefit from the booming professional employer organization (PEO) industry, strong client retention and growth in worksite employees in the long run. 

However, Insperity has not achieved the desired levels despite increasing average worksite employees (WSEs), which remain a major concern. In addition, a sluggish global macro environment can lead to headcount reductions at client companies. An increase in health care costs does not bode well for Insperity as it is one of the major components of operating expenses. Furthermore, client attrition amid increasing competition from the likes of Automatic Data Processing Inc. ADP and TriNet Group, Inc. remain concerns.

For the third quarter of 2016, Insperity projects adjusted earnings in a range of 72 cents to 78 cents a share. Adjusted EBITDA is projected to be $30 million to $32 million and average worksite employees (WSEs) are expected in a range of 170,000 - 170,700, representing growth of 14% to 14.5%.

Earnings Whispers

Our proven model does not conclusively show that Insperity is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Insperity currently has a 0.00% ESP because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 63 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises

Zacks Rank: Insperity has a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

NN Inc. NNBR has an Earnings ESP of +4.35% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mercadolibre, Inc. MELI with an Earnings ESP of +8.24% and a Zacks Rank #1

INSPERITY INC Price and EPS Surprise

INSPERITY INC Price and EPS Surprise | INSPERITY INC Quote

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