General Finance Corporation (NASDAQ:GFN) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 6.4% to hit US$82m. General Finance also reported a statutory profit of US$0.10, which was an impressive 186% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on General Finance after the latest results.

View our latest analysis for General Finance

After the latest results, the consensus from General Finance's two analysts is for revenues of US$319.9m in 2021, which would reflect a definite 8.3% decline in sales compared to the last year of performance. Per-share earnings are expected to bounce 336% to US$0.35. Before this earnings report, the analysts had been forecasting revenues of US$319.8m and earnings per share (EPS) of US$0.29 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the very substantial lift in earnings per share expectations following these results.

The consensus price target was unchanged at US$12.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 8.3%, a significant reduction from annual growth of 7.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - General Finance is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards General Finance following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for General Finance you should be aware of, and 1 of them doesn't sit too well with us.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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