I have to hand it to Administaff (NYSE:ASF): The company's fourth-quarter and full-year 2005 results are certainly impressive.

The company provides outsourced human resources services to other companies. This works well for small-to-medium-sized companies that don't have the expertise and systems in-house and don't want to invest in developing them. In some ways, Administaff resembles the outsourced IT solutions that companies can receive from IBM (NYSE:IBM) or Accenture (NYSE:ACN).

For the year, Administaff delivered a 55.6% increase in diluted earnings per share, to $1.12 per share, on an increase of 20.6% in revenue. For the fourth quarter, the earnings gains were a more pronounced 178.6%. However, it makes more sense to pay attention to the annual numbers and the overall trends.

Administaff is enjoying healthy revenue growth coupled with a containment of operating expenses. Looking down the income statement, every single operating expense line item grew more slowly than revenue, except for advertising; at 20.7%, it essentially matched revenue growth. How long can the company continue this pace and still grow the business? I generally think that the company can sustain this growth rate fairly well, unless or until it begins a large expansion into a new geographical area where it incurs additional office support and other overhead expenses.

Competition is a concern for the company. The company's current focus on providing HR services keeps rivals such as Paychex (NASDAQ:PAYX) and Automatic Data Processing (NYSE:ADP) at bay, because the competitors are primarily trying to expand their payroll processing offerings instead. However, that could change if Administaff's deep-pocketed competition shifts toward more of an HR focus.

Valuation-wise, Administaff carries a trailing P/E multiple of 54. You rarely see that number associated with a stock market bargain unless there are some fundamental changes going on in the business, or some one-time charges masking a stronger underlying performance.

I expect Administaff's performance to ebb and flow with the economy's natural expansions and contractions. HR services are always needed, which lends some stability to the business, and the current healthy economy appears to be helping the company sell its services. Given the earnings cyclicality and the company's current valuation, now might not be the best time for value hounds to buy Administaff if they're seeking the most bang for their buck.

We've outsourced further Foolishness:

Accenture is a Motley Fool Inside Value recommendation.

Nathan Parmelee does not own shares in any of the companies mentioned. You can view his profile here.