General Electric Company (NYSE:GE) with the stream of -2.12% in the last hour of Tuesday’s trading session.
General Electric Company (GE) had a good day on the market for Tuesday December 01 as shares declined -2.12% to close at $10.18. About 125,104,136 million shares traded hands on 114.00M trades for the day, compared with an average daily volume of 114.00M shares out of a total float of 8.74B. After opening the trading day at $10.39, shares of General Electric Company stayed within a range of $9.96 to $10.39.
With today’s loss, General Electric Company now has a market cap of $90.03B. Shares of General Electric Company have been trading within a range of $5.48 and $13.26 over the last year, and it had a 50-day SMA of $32.70% and a 200-day SMA of $38.72%.
With General Electric (NYSE:GE) stock up 32% in the last month, it’s time to take a pause and question whether it remains a good value or not. To shed some light on this question, let’s take a look at each GE industrial segment on an individual basis and then bring them together to see what the company could be worth.
General Electric company
If you are thinking of investing in GE, the first thing you have to accept is that patience is necessary. The fact is, GE won’t look anything like a good value on a conventional basis for a few years yet. As a rough rule of thumb, you could take the fair value of a multi-industry industrial stock to be around 20 times its industrial free cash flow (FCF). For reference, FCF is the yearly flow of cash that can be used to pay down debt, initiate buybacks, or pay dividends.
As you can see below, GE isn’t anywhere near that figure now. Unfortunately, the coronavirus pandemic hit GE very hard due to its heavy exposure to commercial aerospace. As such, Wall Street analysts are forecasting a cash outflow of $1.4 billion in 2020, and then just $2.4 billion in 2021 and $4 billion in 2022. To put these figures into context, GE’s current market cap is $88.2 billion — meaning it won’t trade on 22 times FCF until the end of 2022.
On a superficial level, that’s not an attractive valuation. However, in the context of a company in the middle of a long-term ramp up in margins across three of its four businesses, it is a compelling value.
The long-term case for General Electric
The healthcare segment is performing fine and investors can pencil in at least low-single-digit growth in earnings and FCF for the foreseeable future. In other words, you can think of GE Healthcare as already being a mature business that could be valued, on its own, as a business worth 20 times is FCF.
GE Power and GE Renewable Energy can be lumped together as management turnaround plays. Starting with the renewable energy segment, GE’s two main rivals, Siemens Gamesa and Vestas, have both demonstrated an ability to generate high-single-digit operating profit margin over the years. As such, it’s reasonable to expect that GE Renewable Energy can get there over time.
The interesting thing for GE investors is that there’s a lot of catching up to do. For example, GE Renewable Energy actually had a 4.3% segment margin loss in 2019. However, the segment’s margin was 0.1% in the recent third quarter, and before the pandemic management believed it would be breakeven in 2021. If GE can generate high-single-digit margins in, say 2024, then earnings could easily be $1.4 billion, representing a $2.06 billion swing in profits from 2019’s loss of $666 million.
The PEG ratio is used to determine a stock’s value while taking the company’s earnings growth into account, and is considered to provide a more complete picture than the P/E ratio. Last traded has a PEG ratio of N/A where as its P/E ratio was 25.45. The overall volume in the last trading session was 125,104,136 shares.
General Electric Company has P/S value of 1.07 while its P/B esteem remains at 2.68. Likewise, the company has Return on Assets of 1.20%, Return on Equity of 9.70% and Return on Investment of 2.30%. The company demonstrates Gross Margin and Operating Margin of 22.40% and 15.30% respectively.
GE’s price to sales ratio for trailing twelve months was 1.07 and price to book ratio for most recent quarter was 2.68, whereas price to cash per share for the most recent quarter was 2.30. The Company’s price to free cash flow for trailing twelve months was recorded as 41.43.
Historical Performances to Consider:
The Stock’s performances for Monthly, weekly, half-yearly, quarterly & year-to-date are mentioned below:-
On a Monthly basis the stock was 38.13%. On a weekly basis, the stock remained 4.30%. The half-yearly performance for the stock has 44.40%, while the quarterly performance was 60.57%. Looking further out we can see that the stock has moved -8.78% over the year to date. Other technical indicators are worth considering in assessing the prospects for EQT. RSI for instance was stand at 76.06.