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TriNet Group (TNET)
NYSE:TNET
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TriNet Group
(NYSE:TNET)
Rating:69Neutral
Price Target:―
Positive Factors
Capital Deployment
The long-term capital deployment potential is promising as management has committed to a balanced plan to return 75% of free cash flow to shareholders through dividends and buybacks.
Financial Performance
TriNet’s first-quarter net revenue of $350 million came in $11 million above the analyst's estimate, with upside in net insurance services revenues and interest income.
Strategic Initiatives
TNET is effectively laying the foundation to get back to its roots as a leading HR services provider/PEO while focusing on underwriting profitable insurance to support sustainable growth.
Negative Factors
Investor Sentiment
The company's recent outlook was worse than expected, leading to a downgrade of its stock rating from Buy to Hold.
Market Risks
Increasing macro uncertainty is impacting sales conversions and resulting in lower net client hiring.
Operational Challenges
The company struggles to manage investor expectations, impacting investor sentiment negatively over the next few quarters.
TriNet Group (TNET) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.18B
Dividend Yield1.2%
Average Volume (3M)416.89K
Price to Earnings (P/E)25.8
Beta (1Y)0.72
Revenue Growth1.50%
EPS Growth-44.95%
CountryUS
Employees343,025
SectorIndustrials
Sector Strength90
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)1.99
Shares Outstanding48,399,166
10 Day Avg. Volume316,473
30 Day Avg. Volume416,894
Financial Highlights & Ratios
PEG Ratio-13.28
Price to Book (P/B)61.76
Price to Sales (P/S)0.00
P/FCF Ratio8.79
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$83.33Price Target Upside0.26% Upside
Rating ConsensusHold
Number of Analyst Covering5
TriNet Group Business Overview & Revenue Model
Company DescriptionTriNet Group, Inc. provides human resources (HR) solutions, payroll services, employee benefits, and employment risk mitigation services for small and midsize businesses in the United States. The company offers multi-state payroll processing and tax administration; employee benefits programs, including health insurance and retirement plans; workers compensation insurance and claims management; employment and benefits law compliance; and other HR related services. It serves clients in various industries, including technology, professional services, financial services, life sciences, not-for-profit, property management, retail, manufacturing, and hospitality. The company sells its solutions through its direct sales organization. TriNet Group, Inc. was incorporated in 1988 and is headquartered in Dublin, California.
How the Company Makes MoneyTriNet makes money primarily through its PEO services, where it acts as a co-employer for its clients' employees. The company generates revenue by charging fees for its human resources services, which include payroll processing, benefits administration, and regulatory compliance. These fees are generally based on a percentage of the total payroll processed or as a fixed fee per employee. Additionally, TriNet may earn revenue from insurance premiums associated with employee benefits packages it administers. The company also benefits from strategic partnerships with insurance providers and other vendors, which enhance the range of services and benefits available to its clients. TriNet's earnings are influenced by the number of clients it serves, the number of worksite employees under its management, and the efficiency of its service delivery.
TriNet Group Financial Statement Overview
Summary
TriNet Group demonstrates strong operational performance and cash flow generation, supported by steady revenue growth and impressive EBIT margin improvements. However, the company's high leverage and low equity position present potential risks. While profitability remains solid, attention should be given to enhancing equity levels and maintaining cash earnings. Overall, TriNet remains a profitable entity with strong cash flow, yet it faces challenges in capital structure and cash earnings growth.Income Statement
TriNet Group exhibits solid profitability with a consistently high gross profit margin of approximately 38.3% in TTM (Trailing-Twelve-Months). While the net profit margin has decreased slightly to 3.3% compared to previous periods, the company's revenue has shown steady growth, increasing by approximately 0.6% from 2024 to TTM. The EBIT margin has improved significantly to 26.5%, indicating efficient operational management. However, the EBITDA margin has seen a decrease to 7.0%, suggesting some challenges in maintaining cash earnings. Overall, the income statement reflects strong revenue generation and operational efficiency, but with a need for improvement in cash earnings.78
Positive
Balance Sheet
The balance sheet shows a precarious equity position with a debt-to-equity ratio of 0.57 in TTM, indicating high leverage. Stockholders' equity has drastically decreased, affecting the equity ratio, which stands at only 1.7%. The return on equity is extremely high at 265.1%, primarily due to the low equity base, which could pose a risk if not managed carefully. Overall, the balance sheet suggests a leveraged position with a potential risk due to low equity levels.60
Neutral
Cash Flow
TriNet's cash flow statement is strong, with a significant operating cash flow to net income ratio of 2.97 in TTM, signaling efficient cash conversion. The free cash flow to net income ratio is robust at 2.62, indicating substantial free cash flow generation relative to net income. However, the free cash flow growth rate has slowed compared to previous periods. The cash flow analysis highlights strong liquidity and cash generation capabilities, although growth in free cash flow could be more dynamic.75
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.08B | 5.05B | 4.92B | 4.88B | 4.54B | 4.03B | Gross Profit |
| 934.00M | 952.00M | 1.10B | 1.12B | 937.00M | 793.00M | EBIT |
| 294.00M | 288.00M | 469.00M | 499.00M | 455.00M | 368.00M | EBITDA |
| 357.00M | 363.00M | 662.00M | 610.00M | 520.00M | 446.00M | Net Income Common Stockholders |
| 167.00M | 173.00M | 375.00M | 355.00M | 338.00M | 272.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 349.00M | 360.00M | 352.00M | 430.00M | 747.00M | 358.00M | Total Assets |
| 3.77B | 4.12B | 3.69B | 3.44B | 3.31B | 3.04B | Total Debt |
| 1.02B | 1.02B | 1.14B | 552.00M | 547.00M | 430.00M | Net Debt |
| 670.00M | 662.00M | 850.00M | 198.00M | -65.00M | 129.00M | Total Liabilities |
| 3.71B | 4.05B | 3.62B | 2.67B | 2.43B | 2.44B | Stockholders Equity |
| 63.00M | 69.00M | 78.00M | 775.00M | 881.00M | 607.00M |
| Cash Flow | Free Cash Flow | ||||
| 437.00M | 281.00M | 470.00M | 506.00M | 178.00M | 510.00M | Operating Cash Flow |
| 496.00M | 279.00M | 545.00M | 562.00M | 218.00M | 546.00M | Investing Cash Flow |
| 192.00M | 153.00M | -70.00M | -226.00M | -135.00M | -151.00M | Financing Cash Flow |
| -671.00M | -207.00M | -546.00M | -536.00M | 12.00M | -208.00M |
TriNet Group Technical Analysis
Neutral
83.11
Price Trends
78.99
Positive
81.89
Positive
87.74
Negative
Market Momentum
1.94
Negative
55.26
Neutral
67.16
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TNET, the sentiment is Neutral. The current price of 83.11 is above the 20-day moving average (MA) of 81.71, above the 50-day MA of 78.99, and below the 200-day MA of 87.74, indicating a neutral trend. The MACD of 1.94 indicates Negative momentum. The RSI at 55.26 is Neutral, neither overbought nor oversold. The STOCH value of 67.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TNET.
TriNet Group Risk Analysis
TriNet Group disclosed 29 risk factors in its most recent earnings report. TriNet Group reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
TriNet Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $3.55B | 14.77 | 13.92% | 2.30% | -3.27% | 62.57% | |
75 Outperform | $1.09B | 21.73 | 25.86% | 0.74% | 8.41% | 7.93% | |
69 Neutral | $4.18B | 25.80 | 162.14% | 1.20% | 1.50% | -44.95% | |
64 Neutral | $4.46B | 11.94 | 5.17% | 249.36% | 4.00% | -12.35% | |
62 Neutral | $4.92B | 24.05 | 14.49% | 4.61% | -7.81% | -40.22% | |
57 Neutral | $2.04B | 19.07 | 5.19% | 7.02% | -5.52% | 133.51% | |
53 Neutral | $2.69B | 43.20 | 48.65% | 3.38% | 1.90% | -60.33% |
* Industrials Sector Average
Performance Comparison
TNET
TriNet Group
83.11
-22.45
-21.27%
BBSI
Barrett Business Services
41.60
10.51
33.81%
NSP
Insperity
67.03
-33.29
-33.18%
KFY
Korn Ferry
67.85
3.77
5.88%
MAN
ManpowerGroup
42.72
-28.11
-39.69%
RHI
Robert Half
45.58
-19.62
-30.09%
TriNet Group Earnings Call Summary
Earnings Call Date:Apr 25, 2025
(Q1-2025)
| % Change Since: 7.13%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Neutral
TriNet's earnings call reflected a company navigating a challenging economic environment with strong customer retention and effective cost management. While new sales and SMB confidence were impacted, the company's strategic initiatives and fiscal discipline are positioning it for future growth.Q1-2025 Updates
Positive Updates
Strong Customer Retention
TriNet maintained strong customer retention despite challenges, with retention rates expected to exceed the historical 80% benchmark.
Insurance Repricing Progress
Successfully repriced insurance for two-thirds of the customer base, balancing cost ratio improvement with customer retention.
Revenue and Earnings In Line With Expectations
Total revenue grew by 1% year over year, and the company is on track to meet its full-year financial guidance.
Cost Management and Margin Expansion
Operating expenses declined by 6% year over year, contributing to a strong adjusted EBITDA margin of 12.6%.
Dividend Increase and Share Repurchase
TriNet announced a 10% dividend increase and repurchased 1.2 million shares, demonstrating confidence in the company's momentum.
Negative Updates
Decline in New Sales
New sales declined year over year due to challenging macroeconomic conditions and increased pricing discipline.
SMB Business Confidence Decline
A decline in SMB business confidence resulted in low net customer hiring and lower new sales conversion rates.
Decrease in Co-employed WSEs
Co-employed WSEs decreased by 6% due to reduced new sales compared to the previous year.
Healthcare Cost Challenges
Insurance costs grew by 4%, with medical claims trends remaining elevated, though stabilized.
Company Guidance
During the TriNet Group's first quarter of 2025 earnings call, the company provided guidance indicating that it expects total revenue for the full year to range from $4.9 to $5.1 billion. The company aims to achieve a compounded annual growth rate of 4% to 6% in revenue, expand adjusted EBITDA margins to 10% to 11%, and drive total annualized value creation of 13% to 15% through EPS growth supplemented by share repurchases and dividends. For the full year, TriNet maintains its insurance cost ratio guidance between 92% and 90%, and projects adjusted earnings per diluted share to range from $3.25 to $4.75. Despite a challenging economic environment, the company is on track with its strategic initiatives and expects new sales growth to emerge later in the year, supported by strong customer retention and healthcare price increases.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.