Insight Enterprises, Inc. (NASDAQ: NSIT) has reported its financial results for the fourth quarter and full year ended December 31, 2023. The company highlighted a 4% year-over-year increase in gross profit to $436.2 million, with gross margin expanding by 270 basis points to a record 19.5% for the fourth quarter and up 2% for the full year. Additionally, earnings from operations increased by 16% year over year to $131.9 million for the fourth quarter and up 1% for the full year.
Joyce Mullen, President and Chief Executive Officer, emphasized the company's strong performance, stating, "In the fourth quarter, we achieved gross profit growth of 4% and impressive adjusted diluted earnings per share growth of 18%, strengthened by acquisitions we made in the second half of the year. We continued to see strength in cloud and services gross profit, which offset a decline in gross profit from hardware."
For the full year 2023, net sales decreased by 12% year over year to $9.2 billion. However, gross profit increased by 2%, and gross margin expanded by 250 basis points to 18.2% compared to the prior year. Earnings from operations increased by 1% year over year to $419.8 million for the full year, and adjusted earnings from operations increased by 5% to $492.1 million.
Mullen further added, "We made critical shifts in our operational model to position us well for the future as a solutions integrator. In a tough year from a demand perspective, we achieved record gross margin of 18.2% driven by 26% growth in cloud gross profit and 8% growth in insight core services gross profit."
Regarding the outlook for 2024, the company expects adjusted diluted earnings per share to be between $10.50 and $10.80, with anticipated gross profit growth in the mid to high teens and a gross margin of approximately 19%.
At present, the company's shares have moved -5.1% and are trading at a price of $182.74.
The company's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $7,080 | $7,731 | $8,341 | $9,436 | $10,431 | $9,442 |
| Gross Margins | 14% | 15% | 16% | 15% | 16% | 18% |
| Net Margins | 2% | 2% | 2% | 2% | 3% | 3% |
| Net Income (M) | $164 | $159 | $173 | $219 | $281 | $268 |
| Net Interest Expense (M) | $22 | $28 | $42 | $41 | $39 | $42 |
| Depreciation & Amort. (M) | $22 | $46 | $66 | $55 | $57 | $59 |
| Diluted Shares (M) | 36 | 36 | 36 | 37 | 37 | 37 |
| Earnings Per Share | $4.55 | $4.43 | $4.87 | $5.95 | $7.66 | $7.26 |
| EPS Growth | n/a | -2.64% | 9.93% | 22.18% | 28.74% | -5.22% |
| Avg. Price | $44.52 | $55.56 | $57.06 | $95.87 | $99.09 | $181.635 |
| P/E Ratio | 9.68 | 12.37 | 11.6 | 15.29 | 12.32 | 22.7 |
| Free Cash Flow (M) | $275 | $59 | $331 | $112 | $27 | $677 |
| EV / EBITDA | 6.46 | 9.47 | 6.89 | 9.35 | 8.36 | 13.49 |
| Total Debt (M) | $197 | $859 | $439 | $362 | $638 | $324 |
| Net Debt / EBITDA | 0.21 | 2.6 | 0.92 | 0.67 | 1.01 | 0.17 |
| Current Ratio | 1.52 | 1.62 | 1.43 | 1.42 | 1.36 | 1.36 |
Insight Enterprises is likely undervalued at its current price of $182.74 per share due to its strong revenue growth and consistent earnings per share growth over the last 6 years. However, the company's capital expenditure trend is flat, operating margins are lower than the industry average, and its PEG ratio suggests that the market may be overvaluing its growth potential.
On the positive side, Insight Enterprises has a strong net current asset ratio and a current ratio indicating enough assets to cover liabilities. However, the company is trading above its fair value with a relatively high P/E ratio, and its long-term debt is high compared to its net current asset value. The P/E ratio is also above the historical average, indicating that the shares are trading at a premium.
It's important to note that this analysis is a general overview and not personalized financial advice.
