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TriNet Group (TNET)
NYSE:TNET
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TriNet Group
(NYSE:TNET)61Neutral
Positive Factors
Improving Fundamentals
Improving fundamentals are expected to lift investor sentiment, including a mid-teens total return model.
Negative Factors
Insurance Risks
The company is in the early stages of its strategic initiatives and faces ongoing uncertainty related to its insurance risks.
Stock Rating Downgrade
The company's recent outlook was worse than expected, leading to a downgrade of its stock rating from Buy to Hold.
TriNet Group (TNET) vs. S&P 500 (SPY)
Market Cap
$3.70B
Dividend Yield1.34%
Average Volume (3M)553.33K
Price to Earnings (P/E)21.6
Beta (1Y)0.74
Revenue Growth1.67%
EPS Growth-47.56%
CountryUS
Employees364,300
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)3.40
Shares Outstanding49,527,550
10 Day Avg. Volume802,814
30 Day Avg. Volume553,328
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.73
Price to Cash Flow (P/CF)1.70
P/FCF Ratio1.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$82.75Price Target Upside9.43% Upside
Rating ConsensusHold
Number of Analyst Covering5
TriNet Group Business Overview & Revenue Model
Company DescriptionTriNet Group, Inc. (TNET) is a leading provider of comprehensive human resources solutions for small to medium-sized businesses. The company operates within the professional employer organization (PEO) sector, offering a range of services that include payroll processing, employee benefits, risk mitigation, and compliance with human resources regulations. TriNet's core products and services are designed to help businesses streamline their HR functions, reduce administrative burdens, and focus on their core operations.
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 revenue growth and effective cash flow management, but faces challenges in maintaining profit margins and increasing leverage. The company needs to focus on improving profitability and controlling debt levels for sustained growth.Income Statement
TriNet Group shows consistent revenue growth, with a 2.66% increase from 2023 to 2024. However, there is a significant decrease in gross profit margin from previous years, impacting overall profitability. The net profit margin also decreased, reflecting challenges in maintaining profitability. Despite this, the company has shown resilience in revenue growth amidst a competitive industry.75
Positive
Balance Sheet
The company demonstrates a strong equity ratio, indicating good asset management. However, the debt-to-equity ratio has increased over the years, highlighting rising leverage which could pose financial risk if not managed properly. Return on equity has declined, suggesting less efficient use of shareholders' funds in generating profits.62
Positive
Cash Flow
TriNet Group's operating cash flow remains robust, with a strong free cash flow to net income ratio, indicating effective cash generation. However, the free cash flow growth rate has been negative, reflecting challenges in sustaining high free cash flow levels. The operating cash flow to net income ratio is favorable, showing good cash conversion efficiency.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.05B | 4.92B | 4.88B | 4.54B | 4.03B | Gross Profit |
| 952.00M | 1.10B | 1.12B | 937.00M | 793.00M | EBIT |
| 0.00 | 469.00M | 499.00M | 455.00M | 368.00M | EBITDA |
| 363.00M | 662.00M | 610.00M | 520.00M | 446.00M | Net Income Common Stockholders |
| 173.00M | 375.00M | 355.00M | 338.00M | 272.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 360.00M | 352.00M | 430.00M | 747.00M | 358.00M | Total Assets |
| 4.12B | 3.69B | 3.44B | 3.31B | 3.04B | Total Debt |
| 39.00M | 1.14B | 552.00M | 547.00M | 430.00M | Net Debt |
| -321.00M | 850.00M | 198.00M | -65.00M | 129.00M | Total Liabilities |
| 4.05B | 3.62B | 2.67B | 2.43B | 2.44B | Stockholders Equity |
| 69.00M | 78.00M | 775.00M | 881.00M | 607.00M |
| Cash Flow | Free Cash Flow | |||
| 281.00M | 470.00M | 506.00M | 178.00M | 510.00M | Operating Cash Flow |
| 279.00M | 545.00M | 562.00M | 218.00M | 546.00M | Investing Cash Flow |
| 153.00M | -70.00M | -226.00M | -135.00M | -151.00M | Financing Cash Flow |
| -207.00M | -546.00M | -536.00M | 12.00M | -208.00M |
TriNet Group Technical Analysis
Negative
75.62
Price Trends
85.73
Negative
88.70
Negative
94.37
Negative
Market Momentum
-3.89
Negative
42.66
Neutral
91.41
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TNET, the sentiment is Negative. The current price of 75.62 is below the 20-day moving average (MA) of 76.66, below the 50-day MA of 85.73, and below the 200-day MA of 94.37, indicating a bearish trend. The MACD of -3.89 indicates Negative momentum. The RSI at 42.66 is Neutral, neither overbought nor oversold. The STOCH value of 91.41 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $53.97B | 31.54 | 46.16% | 2.62% | 4.18% | 5.67% | |
77 Outperform | $123.06B | 31.55 | 83.72% | 1.90% | 7.09% | 11.51% | |
68 Neutral | $24.33B | 27.16 | 248.42% | ― | 7.82% | -32.24% | |
66 Neutral | $5.99B | 21.15 | 18.71% | ― | 3.15% | 21.82% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
61 Neutral | $3.70B | 21.56 | 235.37% | 1.34% | 1.67% | -47.56% | |
58 Neutral | $2.74B | 19.51 | 6.67% | 4.97% | -5.61% | 77.92% |
* Industrials Sector Average
Performance Comparison
TNET
TriNet Group
75.62
-46.42
-38.04%
ADP
Automatic Data Processing
306.45
66.23
27.57%
MAN
ManpowerGroup
62.66
-8.08
-11.42%
PAYX
Paychex
153.48
35.35
29.92%
WEX
WEX
158.76
-71.71
-31.11%
GDDY
GoDaddy
175.28
60.70
52.98%
TriNet Group Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -17.92% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
TriNet faced a challenging 2024 with low customer hiring and rising healthcare costs impacting their business. However, strong customer retention, strategic repricing, and a plan to exit non-core businesses indicate a focused approach towards future growth and profitability. Despite the challenges, TriNet's efforts to improve its business model and financial performance appear promising.Highlights
Strong Customer Retention
TriNet drove record retention for 2024 even while renewing business at higher rates. This demonstrates the value customers see in TriNet's services.
Revenue Growth Despite Challenges
Total revenues grew 1% year-over-year in both the fourth quarter and full year, in line with guidance, despite a challenging environment.
Successful Repricing Strategy
TriNet began repricing its insurance cost ratio and expects to exit 2025 in an improved position, with a targeted insurance cost ratio of 92% to 90%.
Lowlights
Low Customer Hiring
Business hiring remained slow as small and medium businesses (SMBs) continued to navigate high interest rates and funding costs, along with muted demand.
Health Insurance Cost Increase
Insurance costs in the fourth quarter grew 12% due to higher health cost inflation and utilization, with an overall 8% increase for the year.
Exit from HRIS SaaS-Only Business
TriNet will exit its HRIS SaaS-only business in 2025, resulting in a $49 million restructuring charge and a decline in revenue from this segment.
Decline in Co-Employed Worksite Employees
The company ended the year with 330,000 co-employed WSEs, down 2% from the previous year, mainly due to low hiring within the installed base.
Company Guidance
During the TriNet fourth quarter 2024 earnings call, the company provided its guidance for 2025, outlining a transition year as they work through strategic changes. TriNet expects total revenues to range between $4.9 billion and $5.1 billion, with a focus on repricing insurance cost ratios to 92% to 90% and driving margins through expense management. The company aims for adjusted EBITDA margins of 7% to 9% and adjusted earnings per diluted share between $3.25 and $4.75. Additionally, TriNet plans to exit its HRIS SaaS-only business, impacting 2025 revenues by $15 million to $20 million, and anticipates a modest price increase contributing $25 million to $30 million. The company is also targeting a medium-term value creation rate of 13% to 15%, driven by revenue growth of 4% to 6% and margin expansion.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.