Is General Electric’s Stock a Buy?
Wall St. Watchdog reveals information about GE’s future prospects. Shares of General Electric (NYSE:GE) are trading around $16.30, which is the same price that it traded at in 1996. In other words, the stock has underperformed the broader market since before Bill Clinton was impeached by the House of Representatives. Despite that underperformance, its revenues and profits have increased over the years, meaning that the stock looks very cheap on a strict valuation basis. Its forward P/E ratio is around 10, analysts estimates its long-term EPS growth at 15%, and EPS growth for the next two years is estimated to be 16%. The stock pays a dividend of 3.7% and its market capitalization is $151 billion. The shares have declined by 10.8% over the year-to-date period, and by 60% over the past decade.
Analysts expect increased demand in its aviation and energy businesses to drive growth going forward. Despite that bullish sentiment, GE faces increased competition from industrial companies such as Siemens (NYSE:SI), ABB (NYSE:ABB), and United Technologies (NYSE:UTX). Another problem with GE is its complexity: it operates in so many different industries, from mortgage financing to power turbines, that its stock is hard to value, and so investors have a hard time figuring out its “story.”
Competitors run the gamut, from Siemens (NYSE:SI), to 3M (NYSE:MMM), Hitachi, Ltd. (NYSE:HIT), Koninklijke Philips Electronics NV (NYSE:PHG), Medtronic, Inc. (NYSE:MDT), Honeywell, International, Inc. (NYSE:HON), Danaher Corporation (NYSE:DHR), and Caterpillar, Inc. (NYSE:CAT).
About the company: General Electric Company is a diversified technology, media and financial services company. The Company offers products and services ranging from aircraft engines, power generation and water processing technology to medical imaging, business and consumer financing, media content and industrial products. General Electric conducts operations globally.
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