Insperity, Inc. (NYSE:NSP), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$119 and falling to the lows of US$92.29. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Insperity's current trading price of US$96.23 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Insperity's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In Insperity?
According to our valuation model, the stock is currently overvalued by about 35%, trading at US$96.23 compared to our intrinsic value of $71.45. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Insperity's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Insperity generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Insperity, it is expected to deliver a highly negative earnings growth in the next few years, which doesn't help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? If you believe NSP should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on NSP for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven't considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
If you want to dive deeper into Insperity, you'd also look into what risks it is currently facing. Our analysis shows 2 warning signs for Insperity (1 makes us a bit uncomfortable!) and we strongly recommend you look at these before investing.
If you are no longer interested in Insperity, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.