Breaking Down Insperity, Inc. (NSP) Financial Health: Key Insights for Investors

As an investor, are you trying to understand the financial stability and prospects of Insperity (NSP)? Did you know that in 2024, Insperity's revenue reached $6.6 billion, marking a 1% increase from the previous year? However, net income saw a significant decrease of 47%, settling at $91 million, with diluted earnings per share also declining by 46% to $2.42. But, with $1.1 billion in cash, cash equivalents, and marketable securities, how is Insperity positioning itself for future growth and what does this mean for your investment strategy?

Insperity, Inc. (NSP) Revenue Analysis

A comprehensive understanding of Insperity, Inc.'s revenue streams is crucial for investors seeking to assess the company's financial health and growth potential. Insperity, Inc. primarily generates revenue through its professional employer organization (PEO) services, offering integrated human resources and business solutions to small and medium-sized businesses.

Here's a breakdown of Insperity's revenue streams:

• PEO Services: This constitutes the bulk of Insperity's revenue. Under the PEO model, Insperity becomes the employer of record for its clients' employees, handling payroll, benefits, HR functions, and regulatory compliance.
• Professional Services: Insperity also provides various professional services, including HR consulting, recruitment, and training, which contribute to its overall revenue.

Analyzing Insperity's year-over-year revenue growth rate provides insights into its performance and market position. While specific figures for the complete fiscal year 2024 are not yet available, examining historical trends offers valuable context. For instance, in 2023, Insperity's total revenues increased by 14% to $6.9 billion from $6.1 billion in 2022. This growth was primarily driven by an increase in the average number of worksite employees (WSEs) paid per month. The average number of WSEs paid per month increased 11% from 366,000 in 2022 to 406,000 in 2023.

A closer look at the contribution of different business segments to Insperity's overall revenue reveals the significance of its PEO services. The PEO segment consistently accounts for the majority of the company's revenue, reflecting the strong demand for outsourced HR solutions among small and medium-sized businesses. In 2023, revenue from the PEO segment was $6.8 billion, up from $6.0 billion in 2022.

Investors should also be aware of any significant changes in Insperity's revenue streams, such as shifts in client base, pricing adjustments, or the introduction of new services. Monitoring these changes can help assess the company's ability to adapt to evolving market conditions and maintain its competitive edge. For example, Insperity's focus on retaining current clients and acquiring new clients is vital for sustaining revenue growth.

Here is a table summarizing Insperity’s revenue and WSE growth:

For further insights into Insperity, Inc. and its investor profile, consider exploring this resource: Exploring Insperity, Inc. (NSP) Investor Profile: Who’s Buying and Why?

Insperity, Inc. (NSP) Profitability Metrics

Analyzing Insperity, Inc. (NSP)'s profitability involves looking at several key metrics that indicate how well the company is managing its costs and generating income. These metrics include gross profit, operating profit, and net profit margins. Additionally, comparing these ratios with industry averages and examining trends over time provides a comprehensive view of the company's financial health.

For the full year 2024, Insperity reported:

• Revenues: $6.6 billion, a 1% increase year-over-year.
• Gross Profit: $1.052 billion, a 1.47% increase from the previous year.
• Net Income: $91 million, a 47% decrease compared to the previous year.
• Diluted Earnings Per Share (EPS): $2.42, a 46% decline year-over-year.

However, the fourth quarter of 2024 presented a mixed picture:

• Gross Profit: Decreased by 2% to $218 million.
• Operating Loss: $15 million, compared to an operating income of $23 million in the same quarter of the previous year.
• Net Loss: $9 million.

Profitability Margins:

Profitability margins provide insight into how much profit Insperity makes relative to its revenue. Here are some key margins for 2024:

• Gross Profit Margin: 15.99%.
• Operating Profit Margin: 1.78%.
• Pretax Profit Margin: 1.91%.
• Net Profit Margin: 1.38%.

The following table summarizes Insperity's profitability metrics:

Trends in Profitability Over Time:

Evaluating the trends in Insperity's profitability over several years provides a clearer picture of its performance. While gross profit has generally increased, net income and operating income have shown more variability.

Gross Profit:

• 2024: $1.052 billion (1.47% increase from 2023)
• 2023: $1.037 billion (2.53% increase from 2022)
• 2022: $1.011 billion (23.30% increase from 2021)

Operating Margin:

• 2024: 1.91%
• 2023: 3.47%
• 2022: 4.13%

Net Income:

• 2024: $91 million
• 2023: $171 million
• 2022: $179 million

Comparison of Profitability Ratios with Industry Averages:

To benchmark Insperity's profitability, it is essential to compare its ratios with industry averages. However, industry-specific data can vary. A general comparison shows:

• Gross Margin: Insperity's gross margin of 15.99% is lower than the industry average.
• Operating Margin: Insperity's operating margin of 1.78% is also lower than some of its competitors.
• Net Profit Margin: The net profit margin of 1.38% is relatively low compared to industry leaders.

Analysis of Operational Efficiency:

Operational efficiency can be assessed through cost management and gross margin trends. Insperity's operating expenses increased by 14% in 2024, impacting profitability. The company is focused on managing these costs, with plans to keep operating expenses relatively flat in 2025 compared to 2024, despite ongoing investments in strategic initiatives like the Workday partnership.

Cost Management:

• Operating expenses increased by 14% in 2024, including approximately $57 million related to the Workday strategic partnership.
• Plans for 2025 include managing operating expenses to remain essentially flat compared to 2024.

Gross Margin Trends:

• Gross profit increased by 1% in 2024, driven by a 3% increase in gross profit per worksite employee per month.
• Gross margin was 13.5% in Q4 2024, a decrease of 60 basis points from Q4 2023.

For more insights into Insperity, check out: Exploring Insperity, Inc. (NSP) Investor Profile: Who’s Buying and Why?

Insperity, Inc. (NSP) Debt vs. Equity Structure

Understanding how Insperity, Inc. (NSP) finances its operations and growth is crucial for investors. A key aspect of this involves analyzing the company's debt levels and its approach to balancing debt and equity.

Here's a breakdown of Insperity, Inc.'s (NSP) debt and equity structure:

As of December 31, 2024, Insperity, Inc. (NSP) reported the following debt levels:

• Long-term debt: $318.2 million
• Short-term debt: $2.3 million

The company's debt-to-equity ratio provides insight into its financial leverage. As of December 31, 2024, Insperity, Inc.'s (NSP) debt-to-equity ratio can be calculated using the total liabilities and total equity figures from its balance sheet.

Here's an overview of Insperity, Inc.'s (NSP) liabilities and equity as of December 31, 2024:

• Total Liabilities: $1.111 billion
• Total Equity: $1.312 billion

Based on these figures, the debt-to-equity ratio is approximately 0.24. This indicates that Insperity, Inc. (NSP) has a relatively conservative capital structure, with debt representing a smaller portion of its overall financing compared to equity. When compared to industry standards, it's important to consider the specific sector in which Insperity, Inc. (NSP) operates. Professional Employer Organizations (PEOs) may have different capital structure norms than other industries.

Recent information regarding Insperity, Inc.'s (NSP) debt issuances, credit ratings, or refinancing activities can further illuminate its financial strategy. Investors can monitor news releases, SEC filings, and credit rating agency reports for updates on these activities.

A balanced approach to financing growth is essential for long-term sustainability. Insperity, Inc. (NSP) strategically uses a mix of debt and equity to fund its initiatives. While debt can provide leverage and potentially lower the cost of capital, equity financing can strengthen the balance sheet and reduce financial risk. The company's decisions regarding debt versus equity depend on factors such as market conditions, growth opportunities, and its overall financial strategy.

For a deeper dive into who is investing in Insperity, Inc. (NSP) and their motivations, check out: Exploring Insperity, Inc. (NSP) Investor Profile: Who’s Buying and Why?

Insperity, Inc. (NSP) Liquidity and Solvency

Analyzing Insperity, Inc.'s financial health requires a close look at its liquidity and solvency positions. These metrics provide insights into the company’s ability to meet its short-term obligations and long-term financial stability. Here’s a breakdown of key liquidity ratios, working capital trends, and cash flow dynamics.

Assessing Insperity, Inc.'s Liquidity:

Liquidity ratios indicate a company's capacity to cover its short-term liabilities with its current assets. Two critical ratios in this assessment are the current ratio and the quick ratio.

• Current Ratio: The current ratio is calculated by dividing current assets by current liabilities. While I don't have specific figures for 2024, a current ratio of above 1 generally indicates that a company has more current assets than current liabilities, suggesting good liquidity.
• Quick Ratio: The quick ratio, also known as the acid-test ratio, excludes inventories from current assets to provide a more conservative measure of liquidity. Again, lacking the 2024 numbers, generally, a quick ratio above 1 is desirable, as it shows the company can meet its short-term obligations even without relying on the sale of inventories.

Analysis of Working Capital Trends:

Working capital, which is the difference between a company's current assets and current liabilities, is a measure of its short-term financial health. Monitoring the trends in working capital can reveal whether Insperity, Inc. is efficiently managing its resources. An increase in working capital typically suggests improved liquidity, while a decrease may indicate potential challenges in meeting short-term obligations. Keep in mind that significant fluctuations in working capital should be examined in the context of the company's operations and industry trends. Without specific 2024 data, it's challenging to provide a precise analysis but monitoring these trends is crucial.

Cash Flow Statements Overview:

Cash flow statements provide a clear picture of how Insperity, Inc. generates and uses cash. These statements are typically divided into three main sections:

• Operating Activities: This section shows the cash generated from the company's core business operations. A positive and stable operating cash flow is generally a sign of financial health.
• Investing Activities: This includes cash flow from the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E). These activities can indicate the company's investments in its future growth.
• Financing Activities: This section covers cash flow related to debt, equity, and dividends. It shows how the company is funding its operations and returning value to shareholders.

Analyzing these cash flow trends over time can provide insights into Insperity, Inc.'s financial stability and ability to fund its operations and growth. Without specific 2024 data, a general overview suggests that positive trends in operating cash flow, strategic investing activities, and balanced financing activities are favorable indicators.

Potential Liquidity Concerns or Strengths

Without access to Insperity, Inc.'s 2024 financial data, it's challenging to pinpoint specific liquidity concerns or strengths. However, here are general considerations:

• Strengths: Consistent positive cash flow from operations, healthy current and quick ratios, and effective working capital management.
• Concerns: Declining cash flow from operations, increasing debt levels, or significant fluctuations in working capital.

Investors and analysts should closely monitor these indicators to gain a comprehensive understanding of Insperity, Inc.'s financial health and stability.

For more insights into Insperity, Inc.'s investor profile, check out: Exploring Insperity, Inc. (NSP) Investor Profile: Who’s Buying and Why?

Insperity, Inc. (NSP) Valuation Analysis

Determining whether Insperity, Inc. (NSP) is overvalued or undervalued requires analyzing several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield, payout ratios, and analyst consensus.

Here’s a breakdown:

Valuation Ratios:

• P/E Ratio: The trailing P/E ratio is 32.96, and the forward P/E ratio is 22.72.
• P/B Ratio: The Price to Book ratio is 30.27.
• EV/EBITDA: The EV/EBITDA ratio is 16.00. A separate source indicates a recent EV/EBITDA of 15.10 as of April 16, 2025. Another source indicates 13.8x as Insperity's latest twelve months EV/EBITDA.

Stock Price Trends:

• Over the last 52 weeks, the stock price has decreased by -24.72%.
• As of April 11, 2025, the latest closing stock price for Insperity was $85.13.
• As of April 16, 2025, the stock price was $78.93, reflecting a -4.80% daily change and a -26.10% yearly change.
• The 52-week high stock price is $109.80, while the 52-week low is $68.79.

Dividend Information:

• The current annual dividend is $2.40, yielding a dividend yield of approximately 3.04%.
• The dividend payout ratio is 98.97%, which means that a high percentage of earnings are being paid out as dividends.
• The last ex-dividend date was March 13, 2025, with a dividend of $0.60 per share.

Analyst Consensus:

• Based on ratings from 6 analysts, Insperity (NSP) has a consensus rating of 'Buy' as of April 18, 2025.
• However, another source indicates a consensus rating of 'Reduce' based on 4 analysts.
• The average price target from analysts is $93.67, suggesting a potential upside of 18.92% from the current price.
• Price targets range from a high of $109.00 to a low of $82.00.

Additional Valuation Insights:

• Market Cap: $2.97 billion.
• Enterprise Value: $2.37 billion.
• Revenue: $6.58 billion in the last 12 months.
• Net Income: $91.00 million in the last 12 months.

Financial Health:

• Current Ratio: 1.08.
• Debt to Equity Ratio: 4.68.
• Return on Equity (ROE): 95.29%.
• Return on Invested Capital (ROIC): 13.64%.

Furthermore, consider Insperity's intrinsic value. One analysis estimates the intrinsic value at $129.4 USD, suggesting the stock is undervalued by 32% compared to a market price of $88.08 USD. Another analysis, as of April 16, 2025, places the intrinsic value at $203.19 USD, indicating the stock is undervalued by 144.00%, given a market price of $83.29 USD.

For more insights into Insperity's mission, vision, and core values, you can refer to Mission Statement, Vision, & Core Values of Insperity, Inc. (NSP).

Insperity, Inc. (NSP) Risk Factors

Understanding the risks that Insperity, Inc. (NSP) faces is crucial for investors. These risks can be both internal and external, impacting the company's financial health and future performance. Here’s a breakdown of some key areas:

Industry Competition and Market Conditions:

• The professional employer organization (PEO) industry is highly competitive. Insperity, Inc. (NSP) competes with national and regional PEOs, as well as traditional human resources outsourcing (HRO) providers.
• Economic downturns and market volatility can significantly affect Insperity, Inc.'s (NSP) client base, particularly small and medium-sized businesses (SMBs). A decrease in employment rates among clients directly impacts Insperity, Inc.'s (NSP) revenue.

Regulatory and Legal Risks:

• Insperity, Inc. (NSP) operates in a heavily regulated environment. Changes in employment laws, healthcare regulations, and tax laws can create compliance challenges and increase operational costs.
• The company faces potential liabilities related to payroll administration, employee benefits, and workplace safety. Litigation and regulatory audits can be costly and time-consuming.

Operational and Financial Risks:

• Maintaining data security and protecting client information is critical. Data breaches or cybersecurity incidents can damage Insperity, Inc.'s (NSP) reputation and result in financial losses.
• Effective management of client credit risk is essential. Defaults by clients on their financial obligations can negatively impact Insperity, Inc.'s (NSP) cash flow and financial stability.

Strategic Risks:

• Insperity, Inc.'s (NSP) ability to attract and retain qualified employees, especially sales and service professionals, is vital for maintaining its competitive edge.
• The success of Insperity, Inc.'s (NSP) growth strategy depends on its ability to successfully integrate acquired businesses and expand into new markets.

For additional insights into Insperity, Inc.'s (NSP) mission, vision, and core values, you can explore: Mission Statement, Vision, & Core Values of Insperity, Inc. (NSP).

Insperity, Inc. (NSP) Growth Opportunities

Insperity, Inc. (NSP) demonstrates promising future growth prospects driven by several key factors. These include strategic initiatives, market expansion, and competitive advantages.

Key growth drivers for Insperity, Inc. (NSP) include:

• Product Innovations: Insperity's continuous enhancements to its HR solutions and technology platforms attract and retain clients.
• Market Expansions: Targeting new geographic regions and industries allows Insperity to broaden its client base.
• Strategic Acquisitions: Acquisitions of complementary businesses can expand Insperity's service offerings and market reach.

Future revenue growth projections and earnings estimates for Insperity, Inc. (NSP) are positive, supported by consistent demand for HR outsourcing services and a strong client retention rate.

Strategic initiatives and partnerships that may drive future growth include:

• Technology Investments: Upgrading technology infrastructure to improve service delivery and client experience.
• Partnerships: Collaborating with other businesses to offer bundled services and expand market presence.
• Expansion of Service Offerings: Introducing new HR-related services to meet evolving client needs.

Insperity, Inc. (NSP) holds several competitive advantages that position it for sustained growth:

• Comprehensive HR Solutions: Offering a wide range of HR services, including payroll, benefits, and HR management.
• Scalable Business Model: Ability to efficiently serve businesses of various sizes, from small to medium-sized enterprises.
• Strong Reputation: A well-established brand with a track record of delivering high-quality HR services.

For more insights into Insperity, Inc. (NSP) investor profile, consider reading: Exploring Insperity, Inc. (NSP) Investor Profile: Who’s Buying and Why?