Insperity Inc Stock Downgraded (NSP)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Insperity (NYSE: NSP) has been downgraded by TheStreet Ratings from buy to hold. 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

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Highlights from the ratings report include:
  • NSP's revenue growth trails the industry average of 19.5%. Since the same quarter one year prior, revenues slightly increased by 3.2%. 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.
  • NSP has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.20, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Professional Services industry and the overall market, INSPERITY INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for INSPERITY INC is rather low; currently it is at 16.91%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.33% trails that of the industry average.

Insperity, Inc. provides an array of human resources (HR) and business solutions to enhance business performance for small and medium-sized businesses in the United States. Insperity has a market cap of $767.2 million and is part of the services sector and diversified services industry. Shares are down 17.4% year to date as of the close of trading on Thursday.

You can view the full Insperity Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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