While Insperity, Inc. (NYSE:NSP) might not have the largest market cap around , it saw significant share price movement during recent months on the NYSE, rising to highs of US$92.23 and falling to the lows of US$72.51. 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$75.66 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 price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We've used the price-to-earnings ratio in this instance because there's not enough visibility to forecast its cash flows. The stock's ratio of 23.69x is currently trading slightly below its industry peers' ratio of 23.7x, which means if you buy Insperity today, you'd be paying a reasonable price for it. And if you believe Insperity should be trading in this range, then there isn't much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Insperity's share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Insperity look like?

Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. However, with a negative profit growth of -7.5% expected over the next couple of years, near-term growth certainly doesn't appear to be a driver for a buy decision for Insperity. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, NSP appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on NSP, take a look at whether its fundamentals have changed.

Are you a potential investor? If you've been keeping tabs on NSP for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there's less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven't considered today, which can help gel your views on NSP should the price fluctuate below the industry PE ratio.

So while earnings quality is important, it's equally important to consider the risks facing Insperity at this point in time. For example, Insperity has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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.