Is Insperity (NSP) Now Mispriced After A 41% One Year Share Price Slump

• If you are wondering whether Insperity’s current share price reflects its real worth, you are not alone. This article will walk through the numbers that matter for value focused investors.
• Insperity’s share price closed at US$40.28, with returns of a 1.4% decline over 7 days, a 6.1% decline over 30 days, a 4.3% gain year to date, and a 41.1% decline over the past year, contributing to 62.2% and 47.9% declines over the last 3 and 5 years respectively.
• Recent coverage of Insperity has focused on its share price performance and how investors are reassessing the business in light of changing expectations and sentiment. This context helps explain why some investors are asking whether the current price reflects short term concern or a longer running reset in expectations.
• Against this backdrop, Insperity’s valuation score stands at 2 out of 6, based on how many standard checks suggest the shares may be undervalued. Next we will look at what different valuation approaches are saying, before finishing with a broader way to think about value that goes beyond the headline models.

Insperity scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Insperity Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model projects the cash Insperity is expected to generate in the future and then discounts those cash flows back to today to estimate what the business might be worth in total.

For Insperity, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about $46.9 million. Analysts provide estimates out to 2027, with free cash flow of $188 million in that year, and Simply Wall St extrapolates this further out to 2035 using a set of growth assumptions for each year.

Bringing all of those projected cash flows back to today gives an estimated intrinsic value of about $189.14 per share. Compared with the recent share price of $40.28, the model output implies the shares are 78.7% undervalued according to these inputs and assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Insperity is undervalued by 78.7%. Track this in your watchlist or portfolio, or discover 55 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Insperity.

Approach 2: Insperity Price vs Earnings

For a profitable company like Insperity, the P/E ratio is a useful way to think about value because it links what you pay directly to the earnings the business is generating today. Investors usually accept a higher P/E when they expect stronger growth or see the business as lower risk, and a lower P/E when growth expectations are more modest or risks feel higher.

Insperity currently trades on a P/E of 89.34x. That sits well above the Professional Services industry average of 21.48x and a peer group average of 15.12x. On the face of it, that suggests investors are paying a much higher price for each dollar of Insperity’s earnings compared with many alternatives in the same space.

Simply Wall St’s Fair Ratio for Insperity is 86.32x. This is a proprietary estimate of what the P/E might reasonably be, after considering factors such as the company’s earnings growth profile, profit margins, industry, market cap and specific risks. Because it adjusts for these company specific features, Fair Ratio can be more useful than a simple comparison with peers or the broad industry. Here, the Fair Ratio is slightly below the actual P/E, which points to Insperity looking a bit expensive on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Insperity Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework that lets you tell a story for Insperity with your own assumptions for future revenue, earnings, margins and fair value, then link that story to today’s share price.

A Narrative connects three pieces: the business story you believe, the financial forecast that flows from it, and the fair value that those numbers suggest, all in one place.

On Simply Wall St, Narratives sit inside the Community page and are designed so any investor can quickly adjust a few key inputs, see an updated fair value, and compare that with the current market price to help decide whether Insperity looks attractive or not for their own approach.

Because Narratives update when new information such as earnings reports or news is added to the platform, your fair value view can shift in step with the business without you rebuilding your model from scratch.

For example, one Insperity Narrative in the Community might assume a much higher fair value than the current price, while another assumes a much lower fair value, reflecting how different investors can look at the same company and reach very different conclusions.

Do you think there's more to the story for Insperity? Head over to our Community to see what others are saying!

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.

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