Critical Survey: TriNet Group (TNET) and Paychex (PAYX)
TriNet Group (NYSE: TNET) and Paychex (NASDAQ:PAYX) are both mid-cap business services companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitabiliy, valuation, analyst recommendations, earnings, risk and dividends.
This table compares TriNet Group and Paychex’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional & Insider Ownership
53.1% of TriNet Group shares are held by institutional investors. Comparatively, 68.4% of Paychex shares are held by institutional investors. 41.8% of TriNet Group shares are held by insiders. Comparatively, 11.6% of Paychex shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Risk & Volatility
TriNet Group has a beta of 2.93, suggesting that its stock price is 193% more volatile than the S&P 500. Comparatively, Paychex has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.
This is a summary of current ratings and target prices for TriNet Group and Paychex, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
TriNet Group presently has a consensus target price of $26.00, suggesting a potential downside of 22.39%. Paychex has a consensus target price of $59.16, suggesting a potential upside of 3.01%. Given Paychex’s higher probable upside, analysts clearly believe Paychex is more favorable than TriNet Group.
Valuation and Earnings
This table compares TriNet Group and Paychex’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|TriNet Group||$3.13 billion||0.73||$175.90 million||$1.10||30.45|
|Paychex||$3.15 billion||6.55||$1.37 billion||N/A||N/A|
Paychex has higher revenue and earnings than TriNet Group.
Paychex pays an annual dividend of $1.84 per share and has a dividend yield of 3.2%. TriNet Group does not pay a dividend. TriNet Group has increased its dividend for 6 consecutive years.
Paychex beats TriNet Group on 8 of the 14 factors compared between the two stocks.
TriNet Group Company Profile
TriNet Group, Inc. is a provider of human resources (HR) solutions for small to medium-sized businesses (SMBs). The Company’s HR solutions include services, such as multi-state payroll processing and tax administration, employee benefits programs, including health insurance and retirement plans, workers’ compensation insurance and claims management, employment and benefit law compliance, and other services. The Company provides an HR technology platform with online and mobile tools that allow its clients and their worksite employees (WSEs) to store, view and manage their HR-related information and conduct a range of HR-related transactions anytime and anywhere. The Company’s HR products and solutions include capabilities, such as technology platform, HR expertise, benefits and compliance. The Company’s clients are distributed across a range of industries, including technology, life sciences, financial services, property management, retail, manufacturing and hospitality.
Paychex Company Profile
Paychex, Inc. is a provider of integrated human capital management (HCM) solutions for payroll, human resource (HR), retirement and insurance services for small- to medium-sized businesses in the United States. The Company also has operations in Germany. The Company offers services, including Payroll processing, Human Resource Services, and Accounting and Financial Services. As of May 31, 2016, the Company serviced approximately 605,000 payroll clients. It offers a portfolio of HCM services and products that allows its clients to meet their payroll and HR needs. Its payroll-related ancillary services and human resource service (HRS) offerings often leverage the information gathered in the base payroll processing service, allowing it to provide outsourcing services covering the HCM spectrum. The Company, through its HCM software-as-a-service platform, Paychex Flex, provides an integrated product suite that covers the employee life cycle from recruiting and hiring to retirement.
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