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Should Value Investors Buy General Finance (GFN) Stock?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

General Finance (GFN) is a stock many investors are watching right now. GFN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

We should also highlight that GFN has a P/B ratio of 1.92. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.87. Over the past 12 months, GFN's P/B has been as high as 4.20 and as low as 1.73, with a median of 2.45.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GFN has a P/S ratio of 0.66. This compares to its industry's average P/S of 0.81.

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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