Trinet Group, Inc. (NYSE: TNET)

Sector: Industrials Industry: Staffing & Employment Services CIK: 0000937098
Market Cap 2.92 Bn
P/B 9.45
P/E 13.22
P/S 0.86
ROIC (Qtr) -26.65
Div Yield % 0.66
Rev 1y % (Qtr) -2.27
Total Debt (Qtr) 942.00 Mn
Debt/Equity (Qtr) 17.44
Add ratio to table...

About

TriNet Group, Inc., also known as TriNet, is a prominent provider of Human Capital Management (HCM) solutions tailored to small and medium-sized businesses (SMBs). The company's stock symbol is TNET, and it operates within the HCM industry, offering a wide range of services and software solutions designed to streamline workflows and connect various HR components. TriNet's main business activities revolve around providing PEO services, HRIS services, and a technology platform that caters to the needs of its clients. The company's PEO services offer...

Read more

Investment thesis

Bull case

  • Healthy cash reserves of 1.98B provide 198.10x coverage of short-term debt 10M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 3.18B provides 3.38x coverage of total debt 942M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 234M exceeds capital expenditure of 69M by 3.39x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 3.18B provides 13.78x coverage of working capital 231M, indicating strong operational backing.
  • Operating cash flow of 303M fully covers other non-current liabilities 174M by 1.74x, showing strong long-term stability.

Bear case

  • Operating cash flow of 303M barely covers its investment activities of (43M), with a coverage ratio of -7.05, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 303M provides thin coverage of dividend payments of (52M) with a -5.83 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (43M) provide weak support for R&D spending of 71M, which is -0.61x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • The company's operating cash flow of 303M shows concerning coverage of stock compensation expenses of 65M, with a 4.66 ratio indicating potential earnings quality issues.
  • Free cash flow of 234M represents just -2.60x of debt issuance (90M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Staffing & Employment Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TNET Trinet Group, Inc. 2.92 Bn 13.22 0.86 0.94 Bn
2 KFY Korn Ferry 2.76 Bn 66.66 3.91 0.55 Bn
3 RHI Robert Half Inc. 2.48 Bn 18.65 0.46 0.25 Bn
4 MAN ManpowerGroup Inc. 1.76 Bn 3.55 0.08 1.64 Bn
5 KFRC Kforce Inc 1.11 Bn -12.63 1.14 0.07 Bn
6 BBSI Barrett Business Services Inc 0.94 Bn 17.65 1.01 0.03 Bn
7 NSP Insperity, Inc. 0.92 Bn -131.16 0.13 0.44 Bn
8 KELYA Kelly Services Inc 0.33 Bn -1.29 0.08 0.16 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.61 0.72
EV to Cash from Ops. EV/CFO 8.63 13.34
EV to Debt EV to Debt 2.45 16.96
EV to EBIT EV/EBIT 8.66 6.77
EV to EBITDA EV/EBITDA 7.66 5.70
EV to Free Cash Flow [EV/FCF] EV/FCF 10.33 27.09
EV to Market Cap EV to Market Cap 0.79 0.88
EV to Revenue EV/Rev 0.68 0.75
Price to Book Value [P/B] P/B 9.45 2.96
Price to Earnings [P/E] P/E 13.22 -37.77
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.98 -0.44
Dividend Payout Ratio % Div Payout % (Qtr) 33.80 -81.87
Dividend per Basic Share Div per Share (Qtr) 1.11 0.84
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 22.67 115.87
Interest Coverage Int. cover (Qtr) 4.88 -11.60
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 11.54 24.71
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 11.73 155.53
Dividend Growth (1y) % Div 1y % (Qtr) 10.50 35.43
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -11.55 -2,529.64
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -7.49 -29.98
EBIT Growth (1y) % EBIT 1y % (Qtr) -5.21 -51.52
EBT Growth (1y) % EBT 1y % (Qtr) -3.98 -79.33
EPS Growth (1y) % EPS 1y % (Qtr) -7.78 -2,182.39
FCF Growth (1y) % FCF 1y % (Qtr) 16.42 229.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -6.93 12.54
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.32 1.87
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.36
Cash Ratio Cash Ratio (Qtr) 0.75 0.80
Current Ratio Curr Ratio (Qtr) 1.09 1.85
Debt to Equity Ratio Debt/Equity (Qtr) 17.44 1.53
Interest Cover Ratio Int Coverage (Qtr) 4.88 -11.60
Times Interest Earned Times Interest Earned (Qtr) 4.88 -11.60
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 6.90 -8.99
EBIT Margin % EBIT Margin % (Qtr) 5.45 -51.06
EBT Margin % EBT Margin % (Qtr) 4.33 -11.99
Gross Margin % Gross Margin % (Qtr) 17.70 33.35
Net Profit Margin % Net Margin % (Qtr) 3.10 -13.87