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General Electric Co GE

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GE’s Comeback Is in Full Swing: The Stock Is One of Our Top Picks in the Industrial Sector

Joshua Aguilar Equity Analyst

Analyst Note

| Joshua Aguilar |

General Electric is undergoing a profound Lean transformation under CEO Larry Culp that the market has yet to fully appreciate. The narrow-moat rated firm’s stock is trading at about a 15% discount to intrinsic value ($15.70 currently, which implies a $126 fair value estimate after the 1-for-8 reverse stock split following the July 30 close), in a U.S. multi-industry category that we estimate trades at just over a 5% premium. It’s also tied for the second cheapest stock in the category based on our fair value estimates.

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Company Profile

Business Description

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, precision health, 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, onshore and offshore wind turbines, as well as medical diagnostic and mobile equipment. GE earns most of its profits on the service revenue of that equipment, which is generally higher-margin. The company is led by former Danaher alum Larry Culp who is leading a multi-year turnaround of the storied conglomerate based on Lean principles.

Contact
5 Necco Street
Boston, MA, 02210
T +1 617 443-3000
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 174,000

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