Investors Who Bought Insperity (NYSE:NSP) Shares Five Years Ago Are Now Up 678%

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For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies are hard to find, but they can generate massive returns over long periods. Just think about the savvy investors who held Insperity, Inc. (NYSE:NSP) shares for the last five years, while they gained 678%. This just goes to show the value creation that some businesses can achieve. On top of that, the share price is up 34% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 15% in 90 days).

It really delights us to see such great share price performance for investors.

See our latest analysis for Insperity

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over half a decade, Insperity managed to grow its earnings per share at 39% a year. This EPS growth is lower than the 51% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how Insperity has grown profits over the years, but the future is more important for shareholders. This free interactive report on Insperity's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Insperity, it has a TSR of 808% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Insperity has rewarded shareholders with a total shareholder return of 80% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 55%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before spending more time on Insperity it might be wise to click here to see if insiders have been buying or selling shares.

We will like Insperity better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.