What Happened?
Shares of HR outsourcing provider Insperity (NYSE: NSP) fell 23.5% in the morning session after the company reported disappointing second-quarter financial results and issued a weak outlook for the rest of the year. The human resources firm posted adjusted earnings of $0.26 per share, a figure that missed analyst estimates and represented a 70% plunge from the prior year. The company attributed the significant drop in profit to higher-than-expected benefits costs, specifically pointing to rising pharmacy expenses and an increased frequency of large insurance claims. This surge in costs also caused the company's gross profit to fall by 14% compared to the same quarter last year. To cap off the disappointing report, Insperity lowered its full-year earnings forecast, signaling to investors that these challenges were expected to persist.
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What Is The Market Telling Us
Insperity’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Insperity and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 4.1% on the news that the company announced a strategic partnership with payments platform Wingspan to launch a new solution for managing independent contractors.
The new platform, called "Insperity Contractor Management powered by Wingspan," is designed to help businesses automate the entire lifecycle of engaging with 1099 workers. This includes processes like onboarding, payments, and tax reporting compliance, streamlining what can be a complex administrative burden for companies. This move allows Insperity, traditionally known as a Professional Employer Organization (PEO) that co-employs a client's workforce, to tap into the rapidly growing contingent or "gig" economy. With reports suggesting that one in three American workers now earns 1099 income, the new service addresses a significant market need and represents a potential new revenue stream for the company.
Insperity is down 39.4% since the beginning of the year, and at $45.78 per share, it is trading 53% below its 52-week high of $97.35 from July 2024. Investors who bought $1,000 worth of Insperity’s shares 5 years ago would now be looking at an investment worth $672.96.
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