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Is General Finance (GFN) Stock Undervalued Right Now?

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Zacks Equity Research
·2 min read
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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is General Finance (GFN). GFN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 17.69, which compares to its industry's average of 39.90. Over the past 52 weeks, GFN's Forward P/E has been as high as 34.38 and as low as 6.46, with a median of 19.44.

Investors will also notice that GFN has a PEG ratio of 1.47. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GFN's PEG compares to its industry's average PEG of 3.47. Within the past year, GFN's PEG has been as high as 2.87 and as low as 0.54, with a median of 1.62.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GFN has a P/S ratio of 0.88. This compares to its industry's average P/S of 1.1.

These figures are just a handful of the metrics value investors tend to look at, but they help show that General Finance is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GFN feels like a great value stock at the moment.


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