Results: Insperity, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders might have noticed that Insperity, Inc. (NYSE:NSP) filed its quarterly result this time last week. The early response was not positive, with shares down 6.1% to US$95.63 in the past week. Revenues were US$1.6b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.48 were also better than expected, beating analyst predictions by 13%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Insperity

Following last week's earnings report, Insperity's four analysts are forecasting 2024 revenues to be US$6.59b, approximately in line with the last 12 months. Statutory earnings per share are expected to plummet 45% to US$2.37 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$6.72b and earnings per share (EPS) of US$2.62 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$108, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Insperity analyst has a price target of US$125 per share, while the most pessimistic values it at US$95.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Insperity is an easy business to forecast or the the analysts are all using similar assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Insperity's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.5% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Insperity.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Insperity going out to 2025, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for Insperity (1 is a bit concerning!) that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com