General Finance Corporation (NASDAQ: GFN) and Exponent (NASDAQ:EXPO) are both small-cap business services companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.

Valuation and Earnings

This table compares General Finance Corporation and Exponent’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
General Finance Corporation $276.93 million 0.49 $59.20 million ($0.25) -20.20
Exponent $311.50 million 6.12 $71.89 million $1.93 38.29

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

Dividends

Exponent pays an annual dividend of $0.84 per share and has a dividend yield of 1.1%. General Finance Corporation does not pay a dividend. Exponent pays out 43.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current ratings and target prices for General Finance Corporation and Exponent, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
General Finance Corporation 0 1 2 0 2.67
Exponent 0 0 1 0 3.00

General Finance Corporation presently has a consensus target price of $7.60, suggesting a potential upside of 50.50%. Exponent has a consensus target price of $75.00, suggesting a potential upside of 1.49%. Given General Finance Corporation’s higher probable upside, equities analysts clearly believe General Finance Corporation is more favorable than Exponent.

Profitability

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

Net Margins Return on Equity Return on Assets
General Finance Corporation -0.90% -1.37% -0.37%
Exponent 15.94% 16.52% 11.53%

Institutional & Insider Ownership

19.1% of General Finance Corporation shares are held by institutional investors. Comparatively, 88.3% of Exponent shares are held by institutional investors. 25.8% of General Finance Corporation shares are held by insiders. Comparatively, 2.8% of Exponent shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

General Finance Corporation has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500. Comparatively, Exponent has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500.

Summary

Exponent beats General Finance Corporation on 10 of the 15 factors compared between the two stocks.

About General Finance Corporation

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 Exponent

Exponent, Inc. (Exponent), along with its subsidiaries, is a science and engineering consulting company. Exponent provides engineering and scientific consulting services to clients around the world. Its service offerings are provided on a project-by-project basis. It operates in two segments: Engineering and Other Scientific, and Environmental and Health. Its Engineering and Other Scientific segment includes biomechanics, biomedical engineering, buildings and structures, civil engineering, construction consulting, materials and corrosion engineering, mechanical engineering, polymer science and materials chemistry, statistical and data sciences, thermal sciences and vehicle analysis services. Its Environmental and Health segment includes chemical regulation and food safety; ecological and biological sciences; environmental and earth sciences, and health sciences. Exponent serves clients in automotive, government, health, insurance, manufacturing and technology, among others.

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