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General Electric Co GE

Morningstar Rating
$155.94 +0.28 (0.18%)
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Company Report

GE: We Raise the Ante and Valuation; Separation, Legislation, and Backlog Create Greater Certainty

After reviewing GE’s 10-K filing, we raise our fair value estimate by 20% to $154. Our long-term estimates for midcycle margins and cash remain unchanged, but we’ve lowered our discount rate by 130 basis points on greater fundamental certainty. We also lower our Uncertainty Rating to Medium from High. In summation, GE is no longer the troubled conglomerate it was five to seven years ago, consistently extinguishing fires. Instead, CEO Larry Culp has positioned these businesses as more nimble leaders serving mission-critical needs. Our revised valuation reflects this increased confidence.

Price vs Fair Value

GE is trading at a 1% premium.
Price
$155.61
Fair Value
$432.00
Uncertainty
Medium
1-Star Price
$718.60
5-Star Price
$179.80
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Bears vastly underestimate the incremental profits GE will make from operating leverage when commercial aerospace fully recovers, as well as the windfall from the Inflation Reduction Act.

Bears

GE's turnaround has a lot of unknowns, including when renewables will finally reach profitability and when the Inflation Reduction Act will move toward full implementation.

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News

Trading Information

Previous Close Price
$155.66
Day Range
$155.11156.07
52-Week Range
$83.38156.92
Bid/Ask
$155.92 / $155.97
Market Cap
$169.82 Bil
Volume/Avg
469,842 / 4.8 Mil

Key Statistics

Price/Earnings (Normalized)
55.58
Price/Sales
2.52
Dividend Yield (Trailing)
0.21%
Dividend Yield (Forward)
0.21%
Total Yield
0.93%

Company Profile

GE was formed through the combination of two companies in 1892, including one with historical ties to American inventor Thomas Edison. Today, GE is a global leader in air travel and in the energy transition. The company is known for its differentiated technology and its massive industrial installed base of equipment sprawled throughout the world. That installed base most notably includes aerospace engines, gas and steam turbines, and onshore and offshore wind turbines. GE earns most of its profits on the service revenue of that equipment, which is generally higher-margin. The company is led by Danaher alumnus Larry Culp, who is leading GE through a breakup of its businesses.
Sector
Industrials
Industry
Specialty Industrial Machinery
Stock Style Box
Large Growth
Total Number of Employees
125,000

Competitors

Valuation

Metric
GE
RR.
ENR
Price/Earnings (Normalized)
55.58353.5030.19
Price/Book Value
6.191.13
Price/Sales
2.521.890.37
Price/Cash Flow
43.4922.70
Price/Earnings
GE
RR.
ENR

Financial Strength

Metric
GE
RR.
ENR
Quick Ratio
0.790.620.55
Current Ratio
1.181.030.92
Interest Coverage
9.455.61−3.48
Quick Ratio
GE
RR.
ENR

Profitability

Metric
GE
RR.
ENR
Return on Assets (Normalized)
1.85%2.51%−8.16%
Return on Equity (Normalized)
10.11%−37.82%
Return on Invested Capital (Normalized)
6.27%128.97%−24.60%
Return on Assets
GE
RR.
ENR
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Economic Moat
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EMR
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