Insperity, Inc. NSP shares have jumped 51% over the past three months, outpacing the industry’s 20.6% return.
NSP’s revenues are expected to increase 1.1% and 4.5% year over year in 2026 and 2027, respectively. Earnings are anticipated to surge 106.8% in 2026 and 41.5% in 2027.
Factors That Augur Well for NSP’s Success
Favorable Market Trend: Per Spherical Insights, the global professional employer organization (PEO) market is expected to grow from $73.6 billion in 2025 to $212.7 billion by 2036, at a CAGR of 11.2%. This swiftly growing industry is currently being driven by the proliferation of small and medium-sized businesses (SMBs), increased costs related to workers’ compensation insurance coverage, workplace safety programs, employee-related complaints and litigation, complex regulation of payroll, payroll tax and employment issues. Insperity, a leader in PEO services, should benefit from this tailwind.
Margin Recovery: NSP prioritizes margin recovery in the first year of its three-year plan. During the first quarter of 2026, the company registered $302 million in gross profit, highlighting a 3% year-over-year dip. Despite this minor decline, the company witnessed a massive 75.6% year- over-year hike sequentially. This lofty growth can be attributed to NSP’s new agreement with UnitedHealthcare, a benefit plan design change, strategic pricing and client selection and enhancement in operational efficiency.
HRScale Rollout: Insperity launched HRScale, which bridges the company’s HR expertise with Workday’s client-facing technology. It is expected to target 150-5,000 employees, resolving historical churn where small clients left NSP post-scaling into large companies requiring human capital management technology. The company was successful at onboarding initial beta clients ahead of schedule in March 2026, and boasts signed client commitments of nearly 6,000 worksite employees to be deployed over the next six months.
Strong Liquidity Profile: Insperity held $635 million in cash at the end of the first quarter of 2026, against zero current debt. It demonstrates that the company holds ample liquidity to drive growth. Furthermore, NSP’s current ratio is at 1.09, a marginal improvement from the preceding quarter’s 1.06. While it may not have surpassed the industry average of 1.39, it exceeds 1, which is a green flag for investors as it signals effective coverage of short-term obligations.
Risks Faced by Insperity
Macroeconomic Headwinds: NSP’s client business outlook survey highlights a significant shift in sentiment with small- and medium-sized businesses becoming cautious regarding the broader economy. Negative sentiments heightened around the economy, with 54% of the surveyed clients expecting their businesses to face challenges, up from 42% in January. Furthermore, a noticeable weakness is witnessed in client optimism regarding sales volume, hiring, net earnings and compensation.
Fierce Competition: Insperity operates in the PEO industry, which is highly fragmented and competitive. Competition in the PEO industry persists primarily in terms of the quality of services offered, and benefits around packaging and pricing. Moreover, PEOs are substantially dependent on climatic conditions and the targeted herd of the markets in which they operate. It creates challenges for NSP in terms of balancing profitability and growth.
NSP’s Zacks Rank & Stocks to Consider
The company has a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the broader Zacks Business Services sector are Skillsoft SKIL and TransUnion TRU, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Skillsoft has a long-term earnings growth expectation of 10%. SKIL delivered a trailing four-quarter earnings surprise of 71.3%, on average.
TransUnion has a long-term earnings growth expectation of 13.5%. TRU delivered a trailing four-quarter earnings surprise of 6.3%, on average.
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This article originally published on Zacks Investment Research (zacks.com).