Insperity, Inc. NSP reported mixed second-quarter 2020 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings of $1.54 per share beat the consensus mark by 41.3% and increased 85.5% year over year. The reported figure exceeded the higher end of the guided range of $1.02-$1.29.
Revenues of $993.4 million however missed the consensus estimate by 0.7% and decreased 5% year over year. The downfall was owing to a decline in paid worksite employees (“WSEEs”), payroll tax deferrals and credits associated with the CARES and Families First Acts, totaling $45 million, and comprehensive service-fee credits provided to the company’s clients, totaling almost $12 million.
The average number of worksite employees paid per month of 227,894 declined 1.8%, owing to layoffs in the client base due to the COVID-19 pandemic.
So far this year, shares of Insperity have lost 18.9% compared with 22.7% decline of the industry it belongs to.
Gross profit of $220.2 million increased 27% from the year-ago quarter on the back of favorable impact of benefits and workers’ compensation cost trends. Gross margin of 22.2% improved from 16.7% in the year-ago quarter. Gross profit per worksite employee per month increased 28.8% year over year to $322.
Adjusted EBITDA was up 62.2% year over year to $91.9 million. Adjusted EBITDA margin of 9.3% improved from 5.4% in the year-ago quarter. Adjusted EBITDA per worksite employee per month increased 66.7% to $135.
Operating expenses increased 9.1% year over year to $147.3 million. Operating expenses per worksite employee per month increased 10.8% to $215.
Operating income increased 88.5% year over year to $72.9 million. Operating income per worksite employee per month increased 91.1% to $107.
Insperity, Inc. Price, Consensus and EPS Surprise
Insperity, Inc. price-consensus-eps-surprise-chart | Insperity, Inc. Quote
Balance Sheet & Cash Flow
Insperity exited second-quarter 2020 with adjusted cash, cash equivalents and marketable securities of $268.97 million compared with $166.89 million at the end of the prior quarter. Long-term debt amounted to $369.40 million, flat sequentially.
During the first six months of 2020, the company repurchased 879,000 of its shares for $61.2 million and paid $31.1 million in cash dividends. Capital expenditures totaled $39 million.
For third-quarter 2020, Insperity projects adjusted earnings in the range of 37-54 cents per share. The current Zacks Consensus Estimate of 41 cents lies within the guided range.
Adjusted EBITDA is anticipated between $29 million and $38 million. Average WSEEs is expected in the range of 227,500-230,000.
For 2020, Insperity revised its guidance for adjusted EPS, adjusted EBITDA and average WSEs.
The company projects adjusted earnings in the band of $3.67-4.04 compared with the prior guidance of $3.19-3.86 per share. The current Zacks Consensus Estimate of $3.39 lies below the updated guidance.
Adjusted EBITDA is anticipated in the range of$235-$255 million compared with the prior-guided range of $215-$250 million.
Average WSEEs are expected in the range of 228,500-233,200 compared with the prior guidance of 221,400-233,200.
Currently, Insperity carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
Equifax( EFX reported better-than-expected second-quarter 2020 adjusted earnings of $1.60 per share, whichbeat the Zacks Consensus Estimate by 22.1% and improved 14.3% on a year-over-year basis. The reported figure exceeded the guided range of 78-88 cents.
IQVIA Holdings IQV reported second-quarter 2020 adjusted earnings per share of $1.18, which beat the consensus mark by 12.4% but decreased 22.9% on a year-over-year basis. The reported figure exceeded the guided range of $1.00-$1.09.
Robert Half RHI reported second-quarter 2020 earnings of 41 cents per share that beat the consensus mark by 17% but were down 58% year over year.
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