GFN vs. SPSC: Which Stock Is the Better Value Option?
Investors interested in stocks from the Business - Services sector have probably already heard of General Finance (GFN) and SPS Commerce (SPSC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
General Finance and SPS Commerce are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GFN has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
GFN currently has a forward P/E ratio of 27.03, while SPSC has a forward P/E of 65.40. We also note that GFN has a PEG ratio of 2.25. 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. SPSC currently has a PEG ratio of 4.36.
Another notable valuation metric for GFN is its P/B ratio of 1.98. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SPSC has a P/B of 8.69.
These metrics, and several others, help GFN earn a Value grade of B, while SPSC has been given a Value grade of D.
GFN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that GFN is likely the superior value option right now.
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General Finance Corporation (GFN) : Free Stock Analysis Report
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