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Trinet Group Inc - Fundamental Investment Case


Publication Date: 26 Nov 2018 - By Robert Prather By Robert Prather

Equity Fundamental Equity USA Consumer

Qualitative Concerns

  • TriNet faces intense competition from Insperity, a similar PEO stealing share in the market.
  • Justworks, a well funded start up, is expanding aggressively  outside of their core NY market into cities like LA and  Dallas. The company has a comparable or better product  at a fraction of the price according to price checks.
  • Large payroll processors (ADP and Paychex) continue to  push into the PEO space.
  • Cloud based providers (like Gusto) continue to roll out  competitive all in one offerings.

Fundamental Concerns

  • Competitive threats already hitting the business with revenue decelerating below market rates.
  • TriNet is losing worksite employees (WSEs), the life blood of the business, while competitors are gaining share.
  • Margins  appear elevated and unsustainable due to aggressive price increases and mix benefits in the service fee and health insurance business.
  • Despite a weakening growth profile and negative WSEs, the company has cut SG&A as a percent of revenue to an all-time low.
  • Multiple appears close to historical  averages but the growth profile is now lower and of less quality.

Trinet Group

Source: VR Fundamental

Pages: 44

Released: 26 Nov 2018

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The Author

Robert Prather

Equity Analyst

Industrials, Telecom & Media, Consumer, Technology



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1-15 Clere Street, EC2A 4UY
London, United Kingdom
1-15 Clere Street, EC2A 4UY
London, United Kingdom
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