TRINET GROUP INC (TNET) Stock Fundamental Analysis
NYSE:TNET - New York Stock Exchange, Inc. - US8962881079 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to TNET. TNET was compared to 82 industry peers in the Professional Services industry. Both the profitability and the financial health of TNET get a neutral evaluation. Nothing too spectacular is happening here. TNET is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
TNET had positive earnings in the past year.
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
TNET has a Return On Assets of 4.42%. This is comparable to the rest of the industry: TNET outperforms 56.10% of its industry peers.
The Return On Equity of TNET (265.08%) is better than 97.56% of its industry peers.
TNET's Return On Invested Capital of 18.50% is amongst the best of the industry. TNET outperforms 85.37% of its industry peers.
TNET had an Average Return On Invested Capital over the past 3 years of 25.86%. This is significantly above the industry average of 12.98%.
The 3 year average ROIC (25.86%) for TNET is well above the current ROIC(18.50%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.42% | ||
| ROE | 265.08% | ||
| ROIC | 18.5% |
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
TNET has a Profit Margin (3.32%) which is in line with its industry peers.
In the last couple of years the Profit Margin of TNET has declined.
TNET's Operating Margin of 5.84% is in line compared to the rest of the industry. TNET outperforms 56.10% of its industry peers.
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 17.96%, TNET is not doing good in the industry: 76.83% of the companies in the same industry are doing better.
TNET's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 5.84% | ||
| PM (TTM) | 3.32% | ||
| GM | 17.97% |
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%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), TNET is creating value.
The number of shares outstanding for TNET has been reduced compared to 1 year ago.
The number of shares outstanding for TNET has been reduced compared to 5 years ago.
The debt/assets ratio for TNET has been reduced compared to a year ago.
2.2 Solvency
TNET has an Altman-Z score of 1.93. This is not the best score and indicates that TNET is in the grey zone with still only limited risk for bankruptcy at the moment.
TNET has a worse Altman-Z score (1.93) than 62.20% of its industry peers.
TNET has a debt to FCF ratio of 2.34. This is a good value and a sign of high solvency as TNET would need 2.34 years to pay back of all of its debts.
TNET has a better Debt to FCF ratio (2.34) than 69.51% of its industry peers.
TNET has a Debt/Equity ratio of 15.60. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 15.60, TNET is not doing good in the industry: 90.24% of the companies in the same industry are doing better.
Although TNET does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 15.6 | ||
| Debt/FCF | 2.34 | ||
| Altman-Z | 1.93 |
ROIC/WACC2.13
WACC8.67%
2.3 Liquidity
A Current Ratio of 1.08 indicates that TNET should not have too much problems paying its short term obligations.
TNET's Current ratio of 1.08 is on the low side compared to the rest of the industry. TNET is outperformed by 67.07% of its industry peers.
A Quick Ratio of 1.08 indicates that TNET should not have too much problems paying its short term obligations.
TNET's Quick ratio of 1.08 is on the low side compared to the rest of the industry. TNET is outperformed by 67.07% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.08 | ||
| Quick Ratio | 1.08 |
3. Growth
3.1 Past
TNET shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -30.77%.
TNET shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 9.74% yearly.
TNET shows a small growth in Revenue. In the last year, the Revenue has grown by 1.86%.
The Revenue has been growing slightly by 5.56% on average over the past years.
EPS 1Y (TTM)-30.77%
EPS 3Y-2.17%
EPS 5Y9.74%
EPS Q2Q%-7.87%
Revenue 1Y (TTM)1.86%
Revenue growth 3Y3.63%
Revenue growth 5Y5.56%
Sales Q2Q%2.22%
3.2 Future
TNET is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 17.99% yearly.
The Revenue is expected to decrease by -37.39% on average over the next years. This is quite bad
EPS Next Y-19.94%
EPS Next 2Y-3.11%
EPS Next 3Y3.45%
EPS Next 5Y17.99%
Revenue Next Year0%
Revenue Next 2Y2.11%
Revenue Next 3Y-37.39%
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
The Price/Earnings ratio is 15.95, which indicates a correct valuation of TNET.
Based on the Price/Earnings ratio, TNET is valued a bit cheaper than 64.63% of the companies in the same industry.
TNET's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.91.
Based on the Price/Forward Earnings ratio of 16.44, the valuation of TNET can be described as correct.
Based on the Price/Forward Earnings ratio, TNET is valued a bit cheaper than 63.41% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.85. TNET is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.95 | ||
| Fwd PE | 16.44 |
4.2 Price Multiples
TNET's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. TNET is cheaper than 64.63% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TNET indicates a rather cheap valuation: TNET is cheaper than 90.24% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 9.43 | ||
| EV/EBITDA | 12.45 |
4.3 Compensation for Growth
The decent profitability rating of TNET may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.64
EPS Next 2Y-3.11%
EPS Next 3Y3.45%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.29%, TNET has a reasonable but not impressive dividend return.
TNET's Dividend Yield is a higher than the industry average which is at 1.98.
Compared to an average S&P500 Dividend Yield of 2.36, TNET's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.29% |
5.2 History
TNET is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
TNET pays out 29.34% of its income as dividend. This is a sustainable payout ratio.
DP29.34%
EPS Next 2Y-3.11%
EPS Next 3Y3.45%
81.82
-1.29 (-1.55%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners98.53%
Inst Owner Change-12.39%
Ins Owners0.72%
Ins Owner Change7.45%
Market Cap3.96B
Analysts76.67
Price Target87.04 (6.38%)
Short Float %3.41%
Short Ratio3.21
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.29% |
Yearly Dividend0.74
Dividend Growth(5Y)N/A
DP29.34%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)48.29%
Min EPS beat(2)21.71%
Max EPS beat(2)74.88%
EPS beat(4)3
Avg EPS beat(4)25.2%
Min EPS beat(4)-12.75%
Max EPS beat(4)74.88%
EPS beat(8)6
Avg EPS beat(8)22.45%
EPS beat(12)10
Avg EPS beat(12)42.65%
EPS beat(16)14
Avg EPS beat(16)49.27%
Revenue beat(2)0
Avg Revenue beat(2)-1.05%
Min Revenue beat(2)-1.1%
Max Revenue beat(2)-1%
Revenue beat(4)0
Avg Revenue beat(4)-1.34%
Min Revenue beat(4)-2.37%
Max Revenue beat(4)-0.89%
Revenue beat(8)0
Avg Revenue beat(8)-1.81%
Revenue beat(12)1
Avg Revenue beat(12)22.63%
Revenue beat(16)5
Avg Revenue beat(16)101.66%
PT rev (1m)-1.16%
PT rev (3m)-11.57%
EPS NQ rev (1m)-1.45%
EPS NQ rev (3m)-27.21%
EPS NY rev (1m)4.12%
EPS NY rev (3m)-24.6%
Revenue NQ rev (1m)-0.8%
Revenue NQ rev (3m)-5.44%
Revenue NY rev (1m)-0.31%
Revenue NY rev (3m)-4.8%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.95 | ||
| Fwd PE | 16.44 | ||
| P/S | 0.79 | ||
| P/FCF | 9.43 | ||
| P/OCF | 7.98 | ||
| P/B | 62.86 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.45 |
EPS(TTM)5.13
EY6.27%
EPS(NY)4.98
Fwd EY6.08%
FCF(TTM)8.68
FCFY10.61%
OCF(TTM)10.25
OCFY12.52%
SpS103.97
BVpS1.3
TBVpS-11.24
PEG (NY)N/A
PEG (5Y)1.64
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.42% | ||
| ROE | 265.08% | ||
| ROCE | 26.04% | ||
| ROIC | 18.5% | ||
| ROICexc | 26.06% | ||
| ROICexgc | 90.1% | ||
| OM | 5.84% | ||
| PM (TTM) | 3.32% | ||
| GM | 17.97% | ||
| FCFM | 8.35% |
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 Turnover1.33
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 15.6 | ||
| Debt/FCF | 2.34 | ||
| Debt/EBITDA | 2.67 | ||
| Cap/Depr | 102.7% | ||
| Cap/Sales | 1.51% | ||
| Interest Coverage | 5.07 | ||
| Cash Conversion | 134.78% | ||
| Profit Quality | 251.5% | ||
| Current Ratio | 1.08 | ||
| Quick Ratio | 1.08 | ||
| Altman-Z | 1.93 |
F-Score7
WACC8.67%
ROIC/WACC2.13
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)-30.77%
EPS 3Y-2.17%
EPS 5Y9.74%
EPS Q2Q%-7.87%
EPS Next Y-19.94%
EPS Next 2Y-3.11%
EPS Next 3Y3.45%
EPS Next 5Y17.99%
Revenue 1Y (TTM)1.86%
Revenue growth 3Y3.63%
Revenue growth 5Y5.56%
Sales Q2Q%2.22%
Revenue Next Year0%
Revenue Next 2Y2.11%
Revenue Next 3Y-37.39%
Revenue Next 5YN/A
EBIT growth 1Y-30.33%
EBIT growth 3Y-9.98%
EBIT growth 5Y4.69%
EBIT Next Year2.18%
EBIT Next 3Y6.98%
EBIT Next 5Y16.07%
FCF growth 1Y100.96%
FCF growth 3Y4.13%
FCF growth 5Y-13.95%
OCF growth 1Y83.03%
OCF growth 3Y8.57%
OCF growth 5Y-9.94%