As of May 24, 2025, General Finance Corp's estimated intrinsic value ranges from $4.87 to $14.64 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $13.57 | -28.6% |
| Discounted Cash Flow (5Y) | $10.35 | -45.6% |
| Dividend Discount Model (Multi-Stage) | $4.87 | -74.4% |
| Dividend Discount Model (Stable) | $12.40 | -34.8% |
| Earnings Power Value | $14.64 | -23.0% |
Is General Finance Corp (GFN) undervalued or overvalued?
With the current market price at $19.01, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate General Finance Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.44 | 0.85 |
| Cost of equity | 5.0% | 8.6% |
| Cost of debt | 6.9% | 8.0% |
| Tax rate | 27.0% | 27.0% |
| Debt/Equity ratio | 0.66 | 0.66 |
| After-tax WACC | 5.0% | 7.5% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $10 | $669M | 78.3% |
| 10-Year Growth | $14 | $767M | 61.4% |
| 5-Year EBITDA | $15 | $800M | 81.8% |
| 10-Year EBITDA | $17 | $862M | 65.7% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $48M |
| Discount Rate (WACC) | 7.5% - 5.0% |
| Enterprise Value | $642M - $956M |
| Net Debt | $356M |
| Equity Value | $285M - $600M |
| Outstanding Shares | 30M |
| Fair Value | $9 - $20 |
| Selected Fair Value | $14.64 |
| Metric | Value |
|---|---|
| Market Capitalization | $575M |
| Enterprise Value | $931M |
| Trailing P/E | 23.26 |
| Forward P/E | 55.83 |
| Trailing EV/EBITDA | 7.25 |
| Current Dividend Yield | 63.80% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.66 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $4.07 |
| Discounted Cash Flow (5Y) | 25% | $2.59 |
| Dividend Discount Model (Multi-Stage) | 20% | $0.97 |
| Dividend Discount Model (Stable) | 15% | $1.86 |
| Earnings Power Value | 10% | $1.46 |
| Weighted Average | 100% | $10.96 |
Based on our comprehensive valuation analysis, General Finance Corp's weighted average intrinsic value is $10.96, which is approximately 42.4% below the current market price of $19.01.
Key investment considerations:
Given these factors, we believe General Finance Corp is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.