Insperity provides services that are designed to help improve business performance. Its main business is human resources (HR) outsourcing for small businesses that don’t have the internal capability to manage payroll and employment administration, employee benefits, workers’ compensation, government compliance, and training and development, as well as other areas.
The company was founded in 1986 and went public in 1997. Insperity is based in Kingwood, Texas, (northeast Houston) and has 2,600 employees and revenues of $3 billion. It has 61 offices, serving 27 markets in the U.S.
The need for its services has increased over the years, given the rising burdens placed on small and medium-sized employers by an increasingly complex legal and regulatory environment. Because Insperity provides employer-related services to a large number of employees, Insperity’s clients can achieve economies of scale that allow them to perform employment-related functions more efficiently, provide a greater variety of employee benefits, and devote more attention to HR management than a small or medium-sized business client can individually.
Insperity targets thriving businesses that have low employment risk, since Insperity’s revenues are based primarily on numbers of employees. The company’s target market is businesses that have up to 5,000 employees and which have relatively low workers’ compensation and unemployment risks.
The company’s strategy is to provide the best small and medium-sized businesses in the U.S. with its specialized human resources services offering. These business solutions relieve business owners and key executives of many employer-related administrative and regulatory burdens, which enables them to focus on running their core businesses.
The company maintains that the variety and comprehensive nature of its benefit plan offerings are generally not available to employees in their small and medium-sized business target market and are usually offered only by larger companies that can spread program costs over a much larger group of employees. As a result, Insperity believes that these benefit plans provide its clients with a competitive advantage that they are typically unable to attain on their own.
In addition, the company has an emphasis on integrity, based on its compensation criteria, a forthright 10-K report with the SEC, and its executives’ tendency to be quite candid in discussing the opportunities – and challenges – facing the company.
Insperity is attractively valued relative to its likely growth prospects. The company seems to have excellent product offerings and a high quality of clients in a growing business. The financial condition and return on capital are excellent.
52-week low and high: $64.55 – $93.65
Market capitalization: $1.8 billion
Dividend yield: 1.4%