Investment Thesis
Insperity exhibits critical cash flow deterioration with negative operating cash flow of -$67M despite $1.9B in revenue, indicating the core business is destroying value. Unsustainable leverage of 5.51x Debt/Equity combined with a 107.9% EPS collapse and tight liquidity create significant financial distress.
Strengths
- Substantial cash position of $537M provides near-term liquidity buffer
- Revenue growth of 3.5% YoY demonstrates continued market demand in staffing services
- Interest coverage ratio of 10.3x indicates current debt service is serviceable
Risks
- Negative operating cash flow of -$67M indicates core business is not generating cash from operations and is fundamentally unsustainable
- Extreme leverage (5.51x Debt/Equity) with minimal equity base ($67M) severely restricts financial flexibility and refinancing options
- Combined tight liquidity (1.09x current ratio), 107.9% EPS decline, and 1.7% net margin leave no margin for operational deterioration
Key Metrics to Watch
- Operating cash flow - must return to positive immediately
- Debt-to-Equity ratio trajectory - any further increase signals distress
- Free cash flow and cash runway depletion rate - critical for solvency assessment
Financial Metrics
Revenue
1.9B
Net Income
33.0M
EPS (Diluted)
$0.88
Free Cash Flow
-73.0M
Total Assets
2.2B
Cash
537.0M
Profitability Ratios
Gross Margin
15.9%
Operating Margin
3.3%
Net Margin
1.7%
ROE
49.3%
ROA
1.5%
FCF Margin
-3.9%
Balance Sheet & Liquidity
Current Ratio
1.09x
Quick Ratio
1.09x
Debt/Equity
5.51x
Debt/Assets
0.0%
Interest Coverage
10.33x
Long-term Debt
369.0M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T18:25:19.090145 |
Data as of: 2026-03-31 |
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