NEW YORK (TheStreet) -- Insperity (NYSE:NSP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.7%. Since the same quarter one year prior, revenues rose by 13.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.31 is sturdy.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Professional Services industry and the overall market on the basis of return on equity, INSPERITY INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- INSPERITY INC's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INSPERITY INC increased its bottom line by earning $0.87 versus $0.65 in the prior year. This year, the market expects an improvement in earnings ($1.28 versus $0.87).
- The gross profit margin for INSPERITY INC is rather low; currently it is at 18.50%. Regardless of NSP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.90% trails the industry average.
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