Critical Review: Insperity (NYSE:NSP) & Kelly Services, Inc. Class A (KELYA)

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Kelly Services, Inc. Class A (NYSE: NSP) and Insperity (NYSE:NSP) are both business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, risk, valuation, profitability, dividends, analyst recommendations and institutional ownership.

Valuation & Earnings

This table compares Kelly Services, Inc. Class A and Insperity’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kelly Services, Inc. Class A $5.37 billion 0.18 $71.59 million $2.20 11.20
Insperity $3.30 billion 1.50 $84.40 million $2.04 57.79

Insperity has lower revenue, but higher earnings than Kelly Services, Inc. Class A. Kelly Services, Inc. Class A is trading at a lower price-to-earnings ratio than Insperity, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Kelly Services, Inc. Class A and Insperity, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kelly Services, Inc. Class A 0 0 2 0 3.00
Insperity 0 2 2 0 2.50

Kelly Services, Inc. Class A presently has a consensus price target of $37.00, suggesting a potential upside of 50.16%. Insperity has a consensus price target of $101.25, suggesting a potential downside of 14.12%. Given Kelly Services, Inc. Class A’s stronger consensus rating and higher probable upside, research analysts clearly believe Kelly Services, Inc. Class A is more favorable than Insperity.

Institutional and Insider Ownership

67.0% of Kelly Services, Inc. Class A shares are owned by institutional investors. Comparatively, 82.5% of Insperity shares are owned by institutional investors. 12.1% of Kelly Services, Inc. Class A shares are owned by insiders. Comparatively, 9.6% of Insperity shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Kelly Services, Inc. Class A and Insperity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kelly Services, Inc. Class A 0.99% 7.62% 3.72%
Insperity 3.06% 122.44% 11.47%

Dividends

Kelly Services, Inc. Class A pays an annual dividend of $0.30 per share and has a dividend yield of 1.2%. Insperity pays an annual dividend of $0.80 per share and has a dividend yield of 0.7%. Kelly Services, Inc. Class A pays out 13.6% of its earnings in the form of a dividend. Insperity pays out 39.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Kelly Services, Inc. Class A has raised its dividend for 3 consecutive years and Insperity has raised its dividend for 6 consecutive years. Kelly Services, Inc. Class A is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Kelly Services, Inc. Class A has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, Insperity has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Kelly Services, Inc. Class A Company Profile

Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries worldwide. The company operates through three segments: Americas Staffing, Global Talent Solutions (GTS), and International Staffing. It provides trained employees for data entry, clerical, and administrative support roles across various industries; schools with instructional and non-instructional employees; support staff for seminars, sales, and trade shows; assemblers, quality control inspectors, and technicians for electronic assembly; maintenance workers, material handlers, and assemblers for light industrial works; scientists, and scientific and clinical research workforce solutions; engineering professionals across various disciplines, including aeronautical, chemical, civil/structural, electrical/instrumentation, environmental, industrial, mechanical, petroleum, pharmaceutical, quality, and telecommunications. The company also provides IT specialists across various disciplines; creative talent in the spectrum of creative services positions; corporate finance departments, accounting firms, and financial institutions with various levels of financial professionals; and legal professionals, including attorneys, paralegals, contract administrators, compliance specialists, and legal administrators. In addition, it provides chefs, porters, and hospitality representatives; and manual workers and semi-skilled professionals in various trade, non-trade, and operational positions. Further, the company provides centrally delivered staffing for large accounts; contingent workforce outsourcing, recruitment process outsourcing, business process outsourcing, and payroll process outsourcing services; contact center staffing solutions; and legal managed services, as well as executive placement, career transition/outplacement, and talent advisory services. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.

Insperity Company Profile

Insperity, Inc. provides human resources (HR) and business solutions to enhance business performance for small and medium-sized businesses in the United States. The company offers its HR services through its Workforce Optimization and Workforce Synchronization solutions, which encompasses a range of human resources functions comprising payroll and employment administration, employee benefits, workers' compensation, government compliance, performance management and training, and development services. It also provides Insperity Premier, a cloud-based human capital management platform that provides professional employer organization HR outsourcing solutions to its clients and worksite employees; and Workforce Administration solution that offers human capital management and payroll services. In addition, the company offers other business performance solutions consisting of human capital management, payroll services, time and attendance, performance management, organizational planning, recruiting services, employment screening and expense management services, retirement services, and insurance services via desktop applications and cloud-based delivery models. The company was formerly known as Administaff, Inc. and changed its name to Insperity, Inc. in March 2011. Insperity, Inc. was founded in 1986 and is headquartered in Kingwood, Texas.

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