Insperity (NSP) Q2 Earnings: What's In The Cards?

Insperity, Inc. (NYSE:NSP) is slated to release second-quarter 2017 results on Aug 1 before the opening bell. Last quarter, the company posted a negative earnings surprise of 0.59%. Moreover, it has reported negative earnings surprises in two of the trailing four quarters, resulting in an average negative earnings surprise of 3.42%.

Furthermore, the human resources company posted disappointing results with both earnings and revenues in the last reported quarter, lagging expectations on both counts. Despite a 10% jump year over year, revenues of $882.7 million missed the Zacks Consensus Estimate of $885.9 million.

For the current quarter ending in July, Insperity projects its per-share adjusted earnings to range from 65–71 cents. Adjusted EBITDA is anticipated in a range of $27–$29 million and average worksite employees (WSEs) are expected in the range of 179,100–180,700, representing growth of 9.5–10.5%.

However, the stock has decreased 4.3% in the last 12 months, underperforming the industry‘s 22.7% rally.

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

Factors to Consider

We believe Insperity is well placed to benefit from the booming PEO industry. Moreover, improved client retention, diversified product portfolio, growth in worksite employees and strength in ancillary products are the other positives.

However, a sluggish global macro environment increases the risk of headcount reduction at client companies. An increase in health care costs does not bode well for Insperity as it is one of the major components of its operating expenses. Furthermore, intensifying competition remains a concern.

Earnings Whispers

Our proven model does not conclusively show that Insperity is likely to beat earnings estimates 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. This is not the case here as you will see below:

Zacks ESP: Insperity currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 53 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Insperity carries a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.

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

Stocks to Consider

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

Kemet Corp. (NYSE:KEM) with an Earnings ESP of +11.11% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank Stocks here.

Vishay Intertechnology, Inc. (NYSE:VSH) with an Earnings ESP of +6.06% and a Zacks Rank #1.

CGI Group, Inc. (NYSE:GIB) with an Earnings ESP of +5.71% and a Zacks Rank #2.

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