TRINET GROUP INC (TNET) Stock Fundamental Analysis
NYSE:TNET - New York Stock Exchange, Inc. - US8962881079 - Common Stock - Currency: USD
TNET gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 82 industry peers in the Professional Services industry. TNET has an average financial health and profitability rating. TNET is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year TNET was profitable.
In the past year TNET had a positive cash flow from operations.
Each year in the past 5 years TNET has been profitable.
Each year in the past 5 years TNET had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 3.90%, TNET is in line with its industry, outperforming 57.32% of the companies in the same industry.
The Return On Equity of TNET (134.58%) is better than 98.78% of its industry peers.
The Return On Invested Capital of TNET (16.69%) is better than 85.37% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for TNET is significantly above the industry average of 12.49%.
The 3 year average ROIC (25.86%) for TNET is well above the current ROIC(16.69%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.9% | ||
| ROE | 134.58% | ||
| ROIC | 16.69% |
ROA(3y)8.22%
ROA(5y)8.76%
ROE(3y)259.1%
ROE(5y)172.1%
ROIC(3y)25.86%
ROIC(5y)24.72%
1.3 Margins
With a Profit Margin value of 2.85%, TNET perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
In the last couple of years the Profit Margin of TNET has declined.
The Operating Margin of TNET (5.55%) is comparable to the rest of the industry.
In the last couple of years the Operating Margin of TNET has remained more or less at the same level.
With a Gross Margin value of 17.62%, TNET is not doing good in the industry: 79.27% of the companies in the same industry are doing better.
In the last couple of years the Gross Margin of TNET has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 5.55% | ||
| PM (TTM) | 2.85% | ||
| GM | 17.62% |
OM growth 3Y-13.14%
OM growth 5Y-0.82%
PM growth 3Y-22.81%
PM growth 5Y-9.04%
GM growth 3Y-2.99%
GM growth 5Y1.21%
2. Health
2.1 Basic Checks
TNET has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for TNET has been reduced compared to 1 year ago.
Compared to 5 years ago, TNET has less shares outstanding
Compared to 1 year ago, TNET has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 1.85 indicates that TNET is not a great score, but indicates only limited risk for bankruptcy at the moment.
TNET's Altman-Z score of 1.85 is on the low side compared to the rest of the industry. TNET is outperformed by 64.63% of its industry peers.
TNET has a debt to FCF ratio of 1.59. This is a very positive value and a sign of high solvency as it would only need 1.59 years to pay back of all of its debts.
TNET has a better Debt to FCF ratio (1.59) than 78.05% of its industry peers.
TNET has a Debt/Equity ratio of 9.20. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 9.20, TNET is doing worse than 90.24% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for TNET, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 9.2 | ||
| Debt/FCF | 1.59 | ||
| Altman-Z | 1.85 |
ROIC/WACC2.1
WACC7.95%
2.3 Liquidity
TNET has a Current Ratio of 1.10. This is a normal value and indicates that TNET is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.10, TNET is doing worse than 69.51% of the companies in the same industry.
A Quick Ratio of 1.10 indicates that TNET should not have too much problems paying its short term obligations.
TNET has a worse Quick ratio (1.10) than 69.51% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.1 | ||
| Quick Ratio | 1.1 |
3. Growth
3.1 Past
TNET shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -34.03%.
Measured over the past years, TNET shows a quite strong growth in Earnings Per Share. The EPS has been growing by 9.74% on average per year.
TNET shows a small growth in Revenue. In the last year, the Revenue has grown by 1.76%.
The Revenue has been growing slightly by 5.56% on average over the past years.
EPS 1Y (TTM)-34.03%
EPS 3Y-2.17%
EPS 5Y9.74%
EPS Q2Q%-24.84%
Revenue 1Y (TTM)1.76%
Revenue growth 3Y3.63%
Revenue growth 5Y5.56%
Sales Q2Q%0.98%
3.2 Future
Based on estimates for the next years, TNET will show a quite strong growth in Earnings Per Share. The EPS will grow by 17.99% on average per year.
Based on estimates for the next years, TNET will show a very negative growth in Revenue. The Revenue will decrease by -12.46% on average per year.
EPS Next Y-20.14%
EPS Next 2Y-3.37%
EPS Next 3Y3.11%
EPS Next 5Y17.99%
Revenue Next Year0.43%
Revenue Next 2Y2.12%
Revenue Next 3Y-12.46%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 13.38, TNET is valued correctly.
Compared to the rest of the industry, the Price/Earnings ratio of TNET indicates a somewhat cheap valuation: TNET is cheaper than 76.83% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.48, TNET is valued a bit cheaper.
Based on the Price/Forward Earnings ratio of 12.85, the valuation of TNET can be described as correct.
Compared to the rest of the industry, the Price/Forward Earnings ratio of TNET indicates a somewhat cheap valuation: TNET is cheaper than 71.95% of the companies listed in the same industry.
TNET is valuated cheaply when we compare the Price/Forward Earnings ratio to 34.04, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.38 | ||
| Fwd PE | 12.85 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of TNET indicates a somewhat cheap valuation: TNET is cheaper than 73.17% of the companies listed in the same industry.
TNET's Price/Free Cash Flow ratio is rather cheap when compared to the industry. TNET is cheaper than 95.12% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 5.01 | ||
| EV/EBITDA | 10.22 |
4.3 Compensation for Growth
The decent profitability rating of TNET may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.37
EPS Next 2Y-3.37%
EPS Next 3Y3.11%
5. Dividend
5.1 Amount
TNET has a Yearly Dividend Yield of 1.72%. Purely for dividend investing, there may be better candidates out there.
The stock price of TNET dropped by -22.41% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
Compared to an average industry Dividend Yield of 2.29, TNET pays a bit more dividend than its industry peers.
Compared to the average S&P500 Dividend Yield of 2.39, TNET is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.72% |
5.2 History
TNET does not have a reliable dividend history as it only pays dividend since a couple or years.
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
34.72% of the earnings are spent on dividend by TNET. This is a low number and sustainable payout ratio.
DP34.72%
EPS Next 2Y-3.37%
EPS Next 3Y3.11%
63.57
-0.23 (-0.36%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners96.15%
Inst Owner Change0.79%
Ins Owners0.83%
Ins Owner Change10.08%
Market Cap3.09B
Analysts76.67
Price Target82.28 (29.43%)
Short Float %4.1%
Short Ratio4.83
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.72% |
Yearly Dividend0.74
Dividend Growth(5Y)N/A
DP34.72%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)16.04%
Min EPS beat(2)10.37%
Max EPS beat(2)21.71%
EPS beat(4)3
Avg EPS beat(4)23.55%
Min EPS beat(4)-12.75%
Max EPS beat(4)74.88%
EPS beat(8)6
Avg EPS beat(8)20.43%
EPS beat(12)10
Avg EPS beat(12)39.65%
EPS beat(16)14
Avg EPS beat(16)44.41%
Revenue beat(2)1
Avg Revenue beat(2)-0.42%
Min Revenue beat(2)-1%
Max Revenue beat(2)0.16%
Revenue beat(4)1
Avg Revenue beat(4)-1.07%
Min Revenue beat(4)-2.37%
Max Revenue beat(4)0.16%
Revenue beat(8)1
Avg Revenue beat(8)-1.62%
Revenue beat(12)1
Avg Revenue beat(12)-1.62%
Revenue beat(16)5
Avg Revenue beat(16)79.4%
PT rev (1m)-4.56%
PT rev (3m)-1.18%
EPS NQ rev (1m)2.85%
EPS NQ rev (3m)-10.77%
EPS NY rev (1m)-0.24%
EPS NY rev (3m)3.87%
Revenue NQ rev (1m)0.24%
Revenue NQ rev (3m)-0.56%
Revenue NY rev (1m)0.43%
Revenue NY rev (3m)0.12%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.38 | ||
| Fwd PE | 12.85 | ||
| P/S | 0.61 | ||
| P/FCF | 5.01 | ||
| P/OCF | 4.45 | ||
| P/B | 28.87 | ||
| P/tB | N/A | ||
| EV/EBITDA | 10.22 |
EPS(TTM)4.75
EY7.47%
EPS(NY)4.95
Fwd EY7.78%
FCF(TTM)12.7
FCFY19.97%
OCF(TTM)14.28
OCFY22.47%
SpS103.81
BVpS2.2
TBVpS-10.33
PEG (NY)N/A
PEG (5Y)1.37
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.9% | ||
| ROE | 134.58% | ||
| ROCE | 23.73% | ||
| ROIC | 16.69% | ||
| ROICexc | 24.56% | ||
| ROICexgc | 83.45% | ||
| OM | 5.55% | ||
| PM (TTM) | 2.85% | ||
| GM | 17.62% | ||
| FCFM | 12.23% |
ROA(3y)8.22%
ROA(5y)8.76%
ROE(3y)259.1%
ROE(5y)172.1%
ROIC(3y)25.86%
ROIC(5y)24.72%
ROICexc(3y)36.08%
ROICexc(5y)36.99%
ROICexgc(3y)106.18%
ROICexgc(5y)88.16%
ROCE(3y)35.96%
ROCE(5y)33.74%
ROICexcg growth 3Y17.36%
ROICexcg growth 5Y22.61%
ROICexc growth 3Y-11.05%
ROICexc growth 5Y3.97%
OM growth 3Y-13.14%
OM growth 5Y-0.82%
PM growth 3Y-22.81%
PM growth 5Y-9.04%
GM growth 3Y-2.99%
GM growth 5Y1.21%
F-Score7
Asset Turnover1.37
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 9.2 | ||
| Debt/FCF | 1.59 | ||
| Debt/EBITDA | 2.8 | ||
| Cap/Depr | 108.45% | ||
| Cap/Sales | 1.53% | ||
| Interest Coverage | 5 | ||
| Cash Conversion | 197.72% | ||
| Profit Quality | 428.47% | ||
| Current Ratio | 1.1 | ||
| Quick Ratio | 1.1 | ||
| Altman-Z | 1.85 |
F-Score7
WACC7.95%
ROIC/WACC2.1
Cap/Depr(3y)87.87%
Cap/Depr(5y)73.22%
Cap/Sales(3y)1.4%
Cap/Sales(5y)1.19%
Profit Quality(3y)127.49%
Profit Quality(5y)124.52%
High Growth Momentum
Growth
EPS 1Y (TTM)-34.03%
EPS 3Y-2.17%
EPS 5Y9.74%
EPS Q2Q%-24.84%
EPS Next Y-20.14%
EPS Next 2Y-3.37%
EPS Next 3Y3.11%
EPS Next 5Y17.99%
Revenue 1Y (TTM)1.76%
Revenue growth 3Y3.63%
Revenue growth 5Y5.56%
Sales Q2Q%0.98%
Revenue Next Year0.43%
Revenue Next 2Y2.12%
Revenue Next 3Y-12.46%
Revenue Next 5YN/A
EBIT growth 1Y-30.86%
EBIT growth 3Y-9.98%
EBIT growth 5Y4.69%
EBIT Next Year0.4%
EBIT Next 3Y5.4%
EBIT Next 5Y16.07%
FCF growth 1Y40.23%
FCF growth 3Y4.13%
FCF growth 5Y-13.95%
OCF growth 1Y37.7%
OCF growth 3Y8.57%
OCF growth 5Y-9.94%