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Trinet Group Inc TNET

Morningstar Rating
$128.01 −0.15 (0.12%)
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Company Report

TriNet Earnings: Pricing Upside and Mix Shift to Higher-Value Customers Offsets Lower Employment

We maintain our $145 fair value estimate for narrow moat TriNet following the release of reasonable fourth-quarter and full-year fiscal 2023 results, which marginally beat both our top-line forecasts and our profitability expectations. TriNet’s worksite employee base shrank year on year as customers curbed hiring and culled workforces amid challenging macroeconomic conditions and tighter access to credit, exacerbated by the firm’s heavy exposure to the small and medium business technology sector. Nevertheless, TriNet offset these headwinds and improved profitability through like-for-like pricing, a skew toward customers with higher product attachment, near-record-high client retention, and prudent cost control. Following the result, we maintain our longer-term outlook and continue to view shares as attractive.

Price vs Fair Value

TNET is trading at a 12% discount.
Price
$128.01
Fair Value
$741.00
Uncertainty
High
1-Star Price
$872.27
5-Star Price
$67.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Rising regulatory complexity, dispersed workforces, and fierce competition for labor are attractive tailwinds for TriNet and PEO peers.

Bears

TriNet is exposed to the small-business market, which is more susceptible to natural attrition and heightened risk of failure in an economic downturn.

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News

Trading Information

Previous Close Price
$128.16
Day Range
$126.04130.25
52-Week Range
$73.86132.62
Bid/Ask
$110.00 / $137.60
Market Cap
$6.47 Bil
Volume/Avg
288,702 / 267,389

Key Statistics

Price/Earnings (Normalized)
17.66
Price/Sales
1.48
Dividend Yield (Trailing)
Dividend Yield (Forward)
0.78%
Total Yield
17.10%

Company Profile

TriNet offers outsourced payroll and human capital management solutions for small and midsize businesses via a professional employer organization model. Under the PEO model, TriNet enters a co-employment arrangement and acts as the employer of record for administrative and regulatory purposes for clients’ employees, known as worksite employees. Clients leverage the scale and expertise of TriNet to access competitive employee benefits, share employment risk liability, access compliance support, and outsource mission-critical day-to-day HR functions such as payroll and tax administration. Following the acquisition of Zenefits and Clarus R+D in 2022, TriNet derives the minority of its revenue from self-service HCM software and R&D tax credit services.
Sector
Industrials
Industry
Staffing & Employment Services
Stock Style Box
Small Core
Total Number of Employees
4,500

Competitors

Valuation

Metric
TNET
PCTY
PAYX
Price/Earnings (Normalized)
17.6628.3427.39
Price/Book Value
83.159.6212.52
Price/Sales
1.487.418.62
Price/Cash Flow
12.8722.6821.23
Price/Earnings
TNET
PCTY
PAYX

Financial Strength

Metric
TNET
PCTY
PAYX
Quick Ratio
0.330.120.42
Current Ratio
1.051.111.23
Interest Coverage
11.7358.10
Quick Ratio
TNET
PCTY
PAYX

Profitability

Metric
TNET
PCTY
PAYX
Return on Assets (Normalized)
13.02%6.84%14.87%
Return on Equity (Normalized)
85.67%32.78%47.17%
Return on Invested Capital (Normalized)
30.96%30.28%36.98%
Return on Assets
TNET
PCTY
PAYX
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