GE Stock Report

2-Year Price History

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A Word Of Caution

The Ockham Research Team has placed an alert on this security because there have been significant developments associated with General Electric Co. (GE). Eventually, these externalities may have an impact on our valuation but these recent events have not yet been fully factored into our analysis.

Please take a moment to look at the RazorWire feed on the right hand side of the report. Each mention of General Electric Co. on business television will be displayed to the right of the report. This should help bring you up to speed on any major issues they are facing right now.

Of course, you may proceed to review our research report for this security, but please be aware that our model may not reflect these significant factors surrounding this company as our data sources are still being updated. This alert shall remain in effect until the situation surrounding this security normalizes substantially.

Therefore, (and as always), check additional sources and available information regarding GE before making an investment decision.

Ockham's Rating

GE Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, GE the high and low end of the Price to Sales per share ratios are 2.50x and 1.68x respectively.

Notice that GE's current Price to Sales per share ratio is 0.57x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $11.46, GE is 73% below where we would expect to see it. This will beneficially factor into our final analysis of GE as it is not often that this stock sinks to these levels.

GE Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of GE, Ockham views their current Cash Earnings as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for GE, the current level of Cash Earnings compared to its historical levels helps identify where GE is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 14.56 and a historical low Cash Earnings per share ratio of 9.67, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for GE? From the Ockham perspective, we are looking specifically at GE to see if the market is recognizing the huge disparity between GE's past stock price to Cash Earnings ratio to today's levels. At a difference of 64% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at GE. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

GE Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.

When reviewing dividend yields for GE, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. GE’s estimated annual dividend is $0.40 resulting in a current dividend yield of 3.49%. The highest dividend yield from GE over recent history was 9.81% while the lowest dividend yield was 0.91%. It is never a good sign for a company to pay significantly lower dividends, in this case 34.89% below the median yield. Although, dividends are a relatively small portion of our analysis framework, we still see this as a negative factor.