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 4 out of 10. The analysis compared the fundamentals against 83 industry peers in the Professional Services industry. TNET has a medium profitability rating, but doesn't score so well on its financial health evaluation. TNET has a valuation in line with the averages, but on the other hand it scores bad on growth.
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.
In the past 5 years TNET has always 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 (4.20%) which is in line with its industry peers.
TNET's Return On Equity of 250.72% is amongst the best of the industry. TNET outperforms 97.59% of its industry peers.
With an excellent Return On Invested Capital value of 14.85%, TNET belongs to the best of the industry, outperforming 81.93% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for TNET is significantly above the industry average of 13.57%.
The last Return On Invested Capital (14.85%) for TNET is well below the 3 year average (24.84%), which needs to be investigated, but indicates that TNET had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.2% | ||
| ROE | 250.72% | ||
| ROIC | 14.85% |
ROA(3y)8.22%
ROA(5y)8.76%
ROE(3y)259.1%
ROE(5y)172.1%
ROIC(3y)24.84%
ROIC(5y)24.11%
1.3 Margins
TNET's Profit Margin of 3.46% is in line compared to the rest of the industry. TNET outperforms 50.60% of its industry peers.
TNET's Profit Margin has declined in the last couple of years.
TNET's Operating Margin of 4.76% is in line compared to the rest of the industry. TNET outperforms 48.19% of its industry peers.
In the last couple of years the Operating Margin of TNET has declined.
TNET's Gross Margin of 18.05% is on the low side compared to the rest of the industry. TNET is outperformed by 77.11% of its industry peers.
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 | 4.76% | ||
| PM (TTM) | 3.46% | ||
| GM | 18.05% |
OM growth 3Y-17.57%
OM growth 5Y-3.89%
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.
Compared to 1 year ago, TNET has less shares outstanding
TNET has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, TNET has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.68, we must say that TNET is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.68, TNET is doing worse than 62.65% of the companies in the same industry.
The Debt to FCF ratio of TNET is 4.89, which is a neutral value as it means it would take TNET, 4.89 years of fcf income to pay off all of its debts.
TNET has a Debt to FCF ratio of 4.89. This is comparable to the rest of the industry: TNET outperforms 55.42% of its industry peers.
TNET has a Debt/Equity ratio of 14.25. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 14.25, TNET is not doing good in the industry: 90.36% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 14.25 | ||
| Debt/FCF | 4.89 | ||
| Altman-Z | 1.68 |
ROIC/WACC1.77
WACC8.39%
2.3 Liquidity
A Current Ratio of 1.07 indicates that TNET should not have too much problems paying its short term obligations.
TNET's Current ratio of 1.07 is on the low side compared to the rest of the industry. TNET is outperformed by 67.47% of its industry peers.
TNET has a Quick Ratio of 1.07. This is a normal value and indicates that TNET is financially healthy and should not expect problems in meeting its short term obligations.
TNET's Quick ratio of 1.07 is on the low side compared to the rest of the industry. TNET is outperformed by 67.47% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.07 | ||
| Quick Ratio | 1.07 |
3. Growth
3.1 Past
The earnings per share for TNET have decreased strongly by -31.52% in the last year.
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 1.67%.
Measured over the past years, TNET shows a small growth in Revenue. The Revenue has been growing by 5.56% on average per year.
EPS 1Y (TTM)-31.52%
EPS 3Y-2.17%
EPS 5Y9.74%
EPS Q2Q%-72.5%
Revenue 1Y (TTM)1.67%
Revenue growth 3Y3.63%
Revenue growth 5Y5.56%
Sales Q2Q%1.37%
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.
TNET is expected to show a very negative growth in Revenue. In the coming years, the Revenue will decrease by -37.14% yearly.
EPS Next Y-23.11%
EPS Next 2Y-3.54%
EPS Next 3Y3.73%
EPS Next 5Y17.99%
Revenue Next Year0.32%
Revenue Next 2Y1.8%
Revenue Next 3Y-37.14%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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 14.42, TNET is valued correctly.
Based on the Price/Earnings ratio, TNET is valued a bit cheaper than the industry average as 66.27% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 28.29. TNET is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 18.76, the valuation of TNET can be described as rather expensive.
The rest of the industry has a similar Price/Forward Earnings ratio as TNET.
When comparing the Price/Forward Earnings ratio of TNET to the average of the S&P500 Index (21.08), we can say TNET is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.42 | ||
| Fwd PE | 18.76 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as TNET.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TNET indicates a somewhat cheap valuation: TNET is cheaper than 66.27% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.4 | ||
| EV/EBITDA | 13.57 |
4.3 Compensation for Growth
The decent profitability rating of TNET may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.48
EPS Next 2Y-3.54%
EPS Next 3Y3.73%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.44%, TNET has a reasonable but not impressive dividend return.
TNET's Dividend Yield is a higher than the industry average which is at 2.41.
With a Dividend Yield of 1.44, TNET pays less dividend than the S&P500 average, which is at 2.52.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.44% |
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
21.39% of the earnings are spent on dividend by TNET. This is a low number and sustainable payout ratio.
DP21.39%
EPS Next 2Y-3.54%
EPS Next 3Y3.73%
76.43
-2 (-2.55%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners98.53%
Inst Owner Change-0.05%
Ins Owners0.72%
Ins Owner Change7.28%
Market Cap3.70B
Analysts76.67
Price Target88.06 (15.22%)
Short Float %3.02%
Short Ratio3.16
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.44% |
Yearly Dividend0.74
Dividend Growth(5Y)N/A
DP21.39%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)31.06%
Min EPS beat(2)-12.75%
Max EPS beat(2)74.88%
EPS beat(4)2
Avg EPS beat(4)16.29%
Min EPS beat(4)-13.93%
Max EPS beat(4)74.88%
EPS beat(8)6
Avg EPS beat(8)22.46%
EPS beat(12)10
Avg EPS beat(12)42.68%
EPS beat(16)14
Avg EPS beat(16)49.5%
Revenue beat(2)0
Avg Revenue beat(2)-1.73%
Min Revenue beat(2)-2.37%
Max Revenue beat(2)-1.1%
Revenue beat(4)0
Avg Revenue beat(4)-1.65%
Min Revenue beat(4)-2.37%
Max Revenue beat(4)-0.89%
Revenue beat(8)0
Avg Revenue beat(8)-1.87%
Revenue beat(12)2
Avg Revenue beat(12)43.3%
Revenue beat(16)6
Avg Revenue beat(16)118.63%
PT rev (1m)1.17%
PT rev (3m)-10.54%
EPS NQ rev (1m)0.08%
EPS NQ rev (3m)-19.46%
EPS NY rev (1m)0.13%
EPS NY rev (3m)-28.32%
Revenue NQ rev (1m)-0.08%
Revenue NQ rev (3m)-2.96%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)-4.5%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.42 | ||
| Fwd PE | 18.76 | ||
| P/S | 0.74 | ||
| P/FCF | 18.4 | ||
| P/OCF | 13.26 | ||
| P/B | 53.61 | ||
| P/tB | N/A | ||
| EV/EBITDA | 13.57 |
EPS(TTM)5.3
EY6.93%
EPS(NY)4.08
Fwd EY5.33%
FCF(TTM)4.15
FCFY5.43%
OCF(TTM)5.76
OCFY7.54%
SpS103.39
BVpS1.43
TBVpS-11.32
PEG (NY)N/A
PEG (5Y)1.48
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.2% | ||
| ROE | 250.72% | ||
| ROCE | 20.91% | ||
| ROIC | 14.85% | ||
| ROICexc | 21.12% | ||
| ROICexgc | 76.34% | ||
| OM | 4.76% | ||
| PM (TTM) | 3.46% | ||
| GM | 18.05% | ||
| FCFM | 4.02% |
ROA(3y)8.22%
ROA(5y)8.76%
ROE(3y)259.1%
ROE(5y)172.1%
ROIC(3y)24.84%
ROIC(5y)24.11%
ROICexc(3y)34.63%
ROICexc(5y)36.12%
ROICexgc(3y)100.94%
ROICexgc(5y)85.02%
ROCE(3y)34.53%
ROCE(5y)32.88%
ROICexcg growth 3Y11.37%
ROICexcg growth 5Y18.81%
ROICexc growth 3Y-15.59%
ROICexc growth 5Y0.75%
OM growth 3Y-17.57%
OM growth 5Y-3.89%
PM growth 3Y-22.81%
PM growth 5Y-9.04%
GM growth 3Y-2.99%
GM growth 5Y1.21%
F-Score6
Asset Turnover1.21
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 14.25 | ||
| Debt/FCF | 4.89 | ||
| Debt/EBITDA | 3.14 | ||
| Cap/Depr | 104% | ||
| Cap/Sales | 1.56% | ||
| Interest Coverage | 4.03 | ||
| Cash Conversion | 89.14% | ||
| Profit Quality | 116.19% | ||
| Current Ratio | 1.07 | ||
| Quick Ratio | 1.07 | ||
| Altman-Z | 1.68 |
F-Score6
WACC8.39%
ROIC/WACC1.77
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)-31.52%
EPS 3Y-2.17%
EPS 5Y9.74%
EPS Q2Q%-72.5%
EPS Next Y-23.11%
EPS Next 2Y-3.54%
EPS Next 3Y3.73%
EPS Next 5Y17.99%
Revenue 1Y (TTM)1.67%
Revenue growth 3Y3.63%
Revenue growth 5Y5.56%
Sales Q2Q%1.37%
Revenue Next Year0.32%
Revenue Next 2Y1.8%
Revenue Next 3Y-37.14%
Revenue Next 5YN/A
EBIT growth 1Y-49.25%
EBIT growth 3Y-14.58%
EBIT growth 5Y1.45%
EBIT Next Year2.18%
EBIT Next 3Y6.98%
EBIT Next 5Y16.07%
FCF growth 1Y-56.68%
FCF growth 3Y4.13%
FCF growth 5Y-13.95%
OCF growth 1Y-48.24%
OCF growth 3Y8.57%
OCF growth 5Y-9.94%