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Capsizing Small Business Drowns TriNet Group (TNET)

Posted on October 14, 2021

Today’s trade involves an underlying we’ve been stalking for nearly two months.

So why now?

Today, our prey appears weaker, tired, like a wounded doe limping through the woods, desperately seeking its mother, but alas! without hope of ever finding her – moreover, the forest chill is deepening, and night is falling.

WOO-HOO!

Anyway, the outfit is called TriNet Group (NYSE:TNET) and they claim to offer human resource services for small business…

But we know better.

Because there is no small business anymore.

After the Batflu tyrants.

But more on that soon.

——————————————–

Fundamentally speaking, TNET trades –

  • With a P/E of 27 (in an industry with a quickly-shrinking customer base),
  • Pays NO dividend,
  • Possesses a P/B of 8.84,
  • And carries too much debt.
  • Beyond that, Q/Q Earnings DECLINED by 26.70%, and
  • Consensus estimates for EPS growth for the next year are just 4.56% (and contracting).
  • And if that weren’t bad enough, insiders – those with the most information on the company’s prospects – have jettisoned 41.57% of their holdings over the last six months, for a total value of $24 million, and not a single insider has made a purchase of the stock in the last year!

Alas, indeed…

The company will announce earnings after the close on October 25th, but our feeling is the die is already cast.

After the most volatile year for small business in a century, earnings predictability for companies like TNET is approaching NIL.  Management all but admits it.

This is a corporate entity that has managed to stoke share-buying by keeping its media profile artificially buoyant.

How?

By announcing every few weeks some very famous person as the latest addition to their “PeopleForce Roster of Esteemed Speakers”.

Regular press releases with A-listers works wonders.

Until it doesn’t.

Have a look at the chart –

The market is wavering and options expiry is Friday.

It could break soon.

G-d in Heaven is watching.

Get with it.

Many happy returns!

Matt McAbby

 

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