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General Electric

NYSE:GE
Snowflake Description

Fair value with mediocre balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
GE
NYSE
$155B
Market Cap
  1. Industrial Conglomerates
Company description

General Electric Company operates as an infrastructure and technology company worldwide. More info.


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3 Month History
GE
Industry
5yr Volatility vs Market

Value

 Is General Electric undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of General Electric to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of General Electric is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for General Electric's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are General Electric's earnings available for a low price, and how does this compare to other companies in the same industry?
  • General Electric is good value based on earnings compared to the US Industrial Conglomerates industry average.
  • General Electric is good value based on earnings compared to the US market.
Price based on expected Growth
Does General Electric's expected growth come at a high price?
  • General Electric is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on General Electric's assets?
  • General Electric is good value based on assets compared to the US Industrial Conglomerates industry average.
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Value checks
We assess General Electric's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Industrial Conglomerates industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Industrial Conglomerates industry average (and greater than 0)? (1 check)
  5. General Electric has a total score of 3/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (5.15%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for General Electric is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$33,537

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $6,271 × (1 + 2.47%) ÷ (13.44% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$58,587

Present value of terminal value:
$31,190

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$64,727 = $33,537 + $31,190

Value = Total value / Shares Outstanding ($64,727 / 8,672)

Discount to Share Price

Value per share:
$7.46

Current discount (share price of $17.83): -138.89%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 13.44% = 2.47% + (1.457 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($154,623,275,550).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

1.457 = 0.901 (1 + (1- 30%) (88.21%))

Levered Beta used in calculation = 1.457



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is General Electric expected to perform in the next 1 to 3 years based on estimates from 13 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
11.2%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is General Electric expected to grow at an attractive rate?
  • General Electric's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • General Electric's earnings growth is expected to exceed the US market average.
  • General Electric's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • General Electric's earnings are expected to grow by 11.2% yearly, however this is not considered high growth (20% yearly).
  • General Electric's revenue is expected to grow by 1.8% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • General Electric is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be below the current US Industrial Conglomerates industry average.
  • An improvement in General Electric's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess General Electric's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
General Electric has a total score of 2/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has General Electric performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare General Electric's growth in the last year to its industry (Industrial Conglomerates).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • General Electric's year on year growth rate is negative over the past 5 years and the most recent earnings are below average.
  • General Electric's 1 year earnings growth is negative, it can't be compared to the 5 year average.
  • General Electric's 1 year earnings growth is negative, it can't be compared to the US Industrial Conglomerates industry average.
Earnings and Revenue History
General Electric's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE < 20%) last year.
  • General Electric performed worse than the US Industrial Conglomerates industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
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Past performance checks
We assess General Electric's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Industrial Conglomerates industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
General Electric has a total score of 0/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is General Electric's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up General Electric's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • General Electric is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • General Electric's long term commitments exceed its cash and other short term assets.
Balance sheet
This treemap shows a more detailed breakdown of General Electric's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is covered by total short term assets, assets are 1x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • General Electric's level of debt (139.9% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has been reduced over the past 5 years (336.9% vs 139.9% today).
  • Total debt is not well covered by annual operating cash flow (3.8%, less than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 4.4x coverage).
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Financial health checks
We assess General Electric's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. General Electric has a total score of 3/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is General Electric's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
2.69%
Current annual income from General Electric dividends. Estimated to be 3.99% next year.
If you bought $2,000 of General Electric shares you are expected to receive $1 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying above low risk savings rate (2.25%).
  • Paying below markets top dividend payers (3.18%).
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been volatile in the past 10 years (annual drop of over 20%).
  • Dividends per share have fallen over the past 10 years.
Current Payout to shareholders
What portion of General Electric's earnings are paid to the shareholders as a dividend.
  • Dividends paid are not well covered by net profit (0.9x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be covered by net profit (1.9x coverage).
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Income/ dividend checks
We assess General Electric's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can General Electric afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. General Electric has a total score of 2/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of General Electric's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
John Flannery, image provided by Google.
John Flannery
AGE 56
TENURE AS CEO 0.3 years
CEO Bio

Mr. John L. Flannery, Jr. has been the Chief Executive Officer of General Electric Company since August 1, 2017 and its Chairman since October 02, 2017. Mr. Flannery served as the Chief Executive Officer and President of GE Healthcare Ltd. from October 2014 to June 12, 2017. Mr. Flannery served as Senior Vice President of Corporate Business Development at General Electric Company (GE) since April 1, 2013. He served as the Chief Executive Officer and President of GE India Services Holding Limited from October 2009 to April 1, 2013 and also served as its senior vice-president of business development - US since April 01, 2014. He served as Senior Vice President of General Electric Capital Corporation. He served as the Chief Executive Officer and President of GE Capital Asia Pacific Ltd., since January 2009. He served as the Chief Executive Officer and President of GE Capital Services India Limited from October 2009 to April 1, 2013. He served as the Chief Executive Officer and President of GE Equity since February 2002. He served as the Chief Executive Officer and President of GE Commercial Finance of Asia Region since October 20, 2015. He has 27 years of experience across GE corporate, GGO and Capital. From August 1999 to February 2002, Mr. Flannery served as the Managing Director of Media and Consumer Group of GE Equity. From January 1997 to August 1999, he served as GE Equity's Managing Director for Latin America, where he started GE Equity's Latin American activities. From January 1997 to August 1999, he served as the President of GE Capital Argentina/Chile. From 1994 to December 1996, he served as Senior Vice President and Manager of Domestic Equity at GE Equity. He joined General Electric Company in 1987. He was a senior leader at GE Capital. Mr. Flannery served as a Director at eMotion, Inc., Pensare, Inc., IZ ON Media LLC, Convey Software, Inc. and GE Equity since July 1999. He served as a Director of EVINE Live Inc. from July 1999 to December 2003. He served as a Member of the Board of Directors at Proact Technologies Corp. Mr. Flannery served as a Director at Valuevision Media Inc. from July 1999 to December 2003. He earned B.S. in Finance and JD from Fairfield University in Fairfield, Connecticut in 1983 and MBA from The Wharton School of Business at the University of Pennsylvania in 1987.

CEO Compensation
  • General Electric has a new CEO, we can't show their compensation history.
Management Team Tenure

Average tenure and age of the General Electric management team in years:

2.7
Average Tenure
54.6
Average Age
  • The tenure for the General Electric management team is about average.
Management Team

John Rice

TITLE
Vice Chairman
COMPENSATION
$15M
AGE
60
TENURE
7 yrs

David Joyce

TITLE
Vice Chair
COMPENSATION
$13M
AGE
60
TENURE
1.2 yrs

Jeff Bornstein

TITLE
Vice Chair
COMPENSATION
$10M
AGE
51
TENURE
0.4 yrs

Beth Comstock

TITLE
Vice Chair of Business Innovations and Chief Executive Officer of Business Innovations
COMPENSATION
$12M
AGE
56
TENURE
2.8 yrs

John Flannery

TITLE
Chairman & CEO
AGE
56
TENURE
0.3 yrs

Jamie Miller

TITLE
CFO & Senior VP
AGE
48

Jan Hauser

TITLE
Chief Accounting Officer
AGE
58
TENURE
4.6 yrs

Vic Abate

TITLE
Chief Technology Officer and Senior Vice President
TENURE
2.2 yrs

Matt Cribbins

TITLE
Vice President of Investor Communications
AGE
44
TENURE
3.8 yrs

Alex Dimitrief

TITLE
Senior Vice President
AGE
58
TENURE
2 yrs
Board of Directors Tenure

Average tenure and age of the General Electric board of directors in years:

8.2
Average Tenure
61.4
Average Age
  • The tenure for the General Electric board of directors is about average.
Board of Directors

John Flannery

TITLE
Chairman & CEO
AGE
56
TENURE
0.1 yrs

Rich Laxer

TITLE
Senior VP
AGE
56
TENURE
1.2 yrs

Dmitri Stockton

TITLE
Senior VP & Chairman
AGE
53

Shelly Lazarus

TITLE
Independent Director
COMPENSATION
$314K
AGE
69
TENURE
17.8 yrs

Susan Hockfield

TITLE
Independent Director
COMPENSATION
$286K
AGE
66
TENURE
10.9 yrs

Marijn Dekkers

TITLE
Independent Director
COMPENSATION
$319K
AGE
60
TENURE
5.4 yrs

Jack Brennan

TITLE
Lead Independent Director
COMPENSATION
$397K
AGE
63
TENURE
3.8 yrs

Mary Schapiro

TITLE
Independent Director
COMPENSATION
$330K
AGE
62
TENURE
4.8 yrs

Andrea Jung

TITLE
Independent Director
COMPENSATION
$323K
AGE
58
TENURE
19.8 yrs

Jim Mulva

TITLE
Independent Director
COMPENSATION
$326K
AGE
71
TENURE
9.8 yrs
Recent Insider Trading
  • More shares have been bought than sold by General Electric insiders in the past 3 months.
Who owns this company?
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Management checks
We assess General Electric's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. General Electric has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

General Electric Company operates as an infrastructure and technology company worldwide. Its Power segment offers gas and steam power systems; maintenance, service, and upgrade solutions; distributed power gas engines; water treatment, wastewater treatment, and process system solutions; and nuclear reactors, fuels, and support services. The company’s Renewable Energy segment provides wind turbine platforms, and hardware and software; onshore and offshore wind turbines; and solutions, products, and services to hydropower industry. Its Oil & Gas segment offers surface and subsea drilling and production systems, and equipment for floating production platforms; and compressors, turbines, turboexpanders, reactors, industrial power generation, and auxiliary equipment. The company’s Aviation segment designs and produces commercial and military aircraft engines, integrated digital components, and electric power and mechanical aircraft systems; and provides aftermarket services. Its Healthcare segment offers diagnostic imaging and clinical systems; products for drug discovery, biopharmaceutical manufacturing, and cellular technologies; and medical technologies, software, analytics, cloud solutions, and implementation services. The company’s Transportation segment provides freight and passenger locomotives, and rail and support advisory services; and parts, integrated software solutions and data analytics, software-enabled solutions, mining equipment and services, and marine diesel and stationary power diesel engines and motors, as well as overhaul, repair and upgrade, and wreck repair services. Its Energy Connections & Lighting segment offers industrial, grid, power conversion, automation and control, lighting, and current solutions. The company’s Capital segment provides industrial and energy financial services; and commercial aircraft leasing, financing, and consulting services. General Electric Company was founded in 1892 and is based in Boston, Massachusetts.

Details
Name: General Electric Company
Ticker: GE
Exchange: NYSE
Founded: 1892
Market Cap: $154,623,275,550
Shares outstanding: 8,672,085,000
Website: http://www.ge.com
Address: General Electric Company
41 Farnsworth Street,
Boston,
Massachusetts, 02210,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NYSE GE Common Stock New York Stock Exchange US USD 02. Jan 1968
DB GEC Common Stock Deutsche Boerse AG DE EUR 02. Jan 1968
XTRA GEC Common Stock XETRA Trading Platform DE EUR 02. Jan 1968
LSE GEC Common Stock London Stock Exchange GB EUR 02. Jan 1968
SWX GE Common Stock SIX Swiss Exchange CH CHF 02. Jan 1968
ENXTPA GNE Common Stock Euronext Paris FR EUR 02. Jan 1968
WBAG GE Common Stock Wiener Boerse AG AT EUR 02. Jan 1968
SNSE GE Common Stock Santiago Stock Exchange CL USD 02. Jan 1968
BVC GE Common Stock Bolsa de Valores de Colombia CO COP 02. Jan 1968
BMV GE * Common Stock Bolsa Mexicana de Valores MX MXN 02. Jan 1968
BATS-CHIXE GEZ Common Stock BATS 'Chi-X Europe' GB CHF 02. Jan 1968
BOVESPA GEOO34 BDR EACH REPR 1 COM SH Bolsa de Valores de Sao Paulo BR BRL 29. Sep 2011
BASE GE CEDEARS EACH REPR 1/5 COM USD0.06 Buenos Aires Stock Exchange AR ARS 12. Jan 2001
Number of employees
Current staff
Staff numbers
295,000
General Electric employees.
Industry
Industry: Industrial Conglomerates
Sector: Capital Goods