TNET
TriNet Group, Inc.
$61.75
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 41.3% below fair value
You pay
$61.75
Bear
$90.27
Fair
$105.14
Bull
$118.46
Bear
$90.27
+46.2%
4% stage 1 growth, 11% discount
Fair
$105.14
+70.3%
7% stage 1 growth, 11% discount
Bull
$118.46
+91.8%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
7.1x
Market is pricing in (growth)
-5.4%
vs 6.5% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $75.00 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $105.14 per share.
Warnings
Stock-based employee pay equals 42% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $75.00 (from 15 analysts). Our estimate is 54% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions