Analyzing General Finance (NASDAQ:GFN) & Genpact (G)

General Finance (NASDAQ: GFN) and Genpact (NYSE:G) are both industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Volatility & Risk

General Finance has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500. Comparatively, Genpact has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Insider and Institutional Ownership

27.6% of General Finance shares are held by institutional investors. Comparatively, 91.2% of Genpact shares are held by institutional investors. 25.9% of General Finance shares are held by company insiders. Comparatively, 1.4% of Genpact shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares General Finance and Genpact’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
General Finance $276.93 million 0.67 -$2.96 million ($0.21) -33.33
Genpact $2.57 billion 2.50 $269.68 million $1.38 24.13

Genpact has higher revenue and earnings than General Finance. General Finance is trading at a lower price-to-earnings ratio than Genpact, indicating that it is currently the more affordable of the two stocks.

Dividends

Genpact pays an annual dividend of $0.24 per share and has a dividend yield of 0.7%. General Finance does not pay a dividend. Genpact pays out 17.4% of its earnings in the form of a dividend.

Profitability

This table compares General Finance and Genpact’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
General Finance -0.73% -1.29% -0.31%
Genpact 10.18% 23.86% 9.71%

Analyst Ratings

This is a breakdown of current ratings for General Finance and Genpact, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
General Finance 0 1 1 0 2.50
Genpact 0 2 6 0 2.75

General Finance currently has a consensus target price of $9.20, indicating a potential upside of 31.43%. Genpact has a consensus target price of $33.14, indicating a potential downside of 0.47%. Given General Finance’s higher probable upside, equities analysts plainly believe General Finance is more favorable than Genpact.

Summary

Genpact beats General Finance on 12 of the 16 factors compared between the two stocks.

About General Finance

General Finance Corporation is a specialty rental services company. The Company offers a range of portable storage units, including its core 20-feet and 40-feet steel containers, office container, mobile office and modular space products and steel tanks. It has two geographic areas that include its four operating segments: the Asia-Pacific area, consisting of the leasing operations of Royal Wolf Holdings Limited and its Australian and New Zealand subsidiaries (Royal Wolf), and North America, consisting of the combined leasing operations of Pac-Van, Inc. and its Canadian subsidiary, PV Acquisition Corp. (Pac-Van) and Lone Star Tank Rental Inc. (Lone Star), and the manufacturing operations of GFN Manufacturing Corporation and its subsidiary, Southern Frac, LLC (Southern Frac). As of June 30, 2016, the Company provided its storage solutions to over 41,000 customers across a range of industries, including commercial, construction, retail, transportation, education and others.

About Genpact

Genpact Limited is engaged in providing digitally powered business process management and services. The Company is also engaged in designing, transforming and running a combination of processes, as well as providing solutions that combine elements of its service offerings. The Company’s segments include Business process outsourcing and Information technology services. The Company offers various vertical activities, which include banking and financial services, capital markets, consumer product goods services, healthcare, infrastructure and manufacturing services, insurance and life sciences. In addition to these vertical activities, it also offers analytics and research, collections and customer services, consulting and transformation services, core industry operations services, enterprise application services, finance and accounting (F&A) services, information technology (IT) infrastructure management services, and supply chain and procurement services.

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