What Is Insperity, Inc.'s (NYSE:NSP) Share Price Doing?

Insperity, Inc. (NYSE:NSP), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$130 at one point, and dropping to the lows of US$109. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Insperity's current trading price of US$115 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Insperity’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Insperity

What Is Insperity Worth?

According to my valuation model, Insperity seems to be fairly priced at around 2.4% below my intrinsic value, which means if you buy Insperity today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $118.03, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Insperity’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Insperity look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -3.8% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Insperity. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, NSP appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on NSP for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on NSP should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Insperity at this point in time. While conducting our analysis, we found that Insperity has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Insperity, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.