Critical Survey: Mistras Group (MG) versus General Finance Corporation (GFN)

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

Risk & Volatility

General Finance Corporation has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Mistras Group has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
General Finance Corporation -1.81% -1.76% -0.48%
Mistras Group 2.69% 7.04% 4.06%

Earnings and Valuation

This table compares General Finance Corporation and Mistras Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
General Finance Corporation $275.92 million 0.46 $55.88 million ($0.33) -14.39
Mistras Group $680.81 million 0.75 $53.46 million $0.61 29.52

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

Institutional & Insider Ownership

19.3% of General Finance Corporation shares are held by institutional investors. Comparatively, 57.1% of Mistras Group shares are held by institutional investors. 25.8% of General Finance Corporation shares are held by company insiders. Comparatively, 44.7% of Mistras Group 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.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for General Finance Corporation and Mistras Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
General Finance Corporation 0 0 2 0 3.00
Mistras Group 0 3 2 0 2.40

General Finance Corporation currently has a consensus price target of $7.60, suggesting a potential upside of 60.00%. Mistras Group has a consensus price target of $34.40, suggesting a potential upside of 91.00%. Given Mistras Group’s higher probable upside, analysts clearly believe Mistras Group is more favorable than General Finance Corporation.

Summary

Mistras Group beats General Finance Corporation on 9 of the 12 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 Mistras Group

Mistras Group, Inc. offers asset protection solutions and is a provider of technology-enabled asset protection solutions used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure. The Company’s segments are Services segment, which provides asset protection solutions in North America with concentration on the United States along with a Canadian services business, consisting of non-destructive testing, and inspection and engineering services that are used to evaluate structural integrity and reliability of critical energy, industrial and public infrastructure; International segment, which offers services, products and systems similar to those of its Services and Products and Systems segments to markets in Europe, the Middle East, Africa, Asia and South America, and Products and Systems segment, which designs, manufactures, sells, installs and services asset protection products and systems, including equipment and instrumentation.

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