September 25, 2016
NYSE: GE
GENERAL ELECTRIC CO
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
$0.92
B-
C+
C
Annual Dividend Yield
3.06%
SELL
C-
D
Beta
1.12
Sector: Industrials
GE BUSINESS DESCRIPTION
General Electric Company (GE) operates as an
infrastructure and financial services company
worldwide.
D+
D-
E+
E
E-
Market Capitalization
$269.2 Billion
Sub-Industry: Industrial Conglomerates
Weekly Price: (US$)
SMA (50)
F
BUY
52-Week Range
$24.26-$33.00
RATING SINCE
TARGET PRICE
07/25/2016
$35.62
Price as of 9/22/2016
$30.04
Source: S&P
SMA (100)
1 Year
2 Years
36
TARGET
PRICE
$35.62
TARGET
TARGETPRICE
PRICE$35.62
$35.62
34
32
STOCK PERFORMANCE (%)
3 Mo.
Price Change
-2.41
1 Yr.
19.63
3 Yr (Ann)
7.75
30
28
GROWTH (%)
Last Qtr
6.67
312.50
111.76
Revenues
Net Income
EPS
12 Mo.
9.46
290.40
500.00
26
3 Yr CAGR
-5.55
-5.67
-15.66
24
22
Rating History
RETURN ON EQUITY (%)
BUY
GE
9.65
1.18
10.04
Q2 2016
Q2 2015
Q2 2014
Ind Avg
26.83
23.79
20.93
S&P 500
11.83
13.71
14.43
HOLD
BUY
BUY
Volume in Millions
2,000
1,000
2015
P/E COMPARISON
HOLD
0
2016
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
35.76
31.81
25.19
GE
Ind Avg
S&P 500
2014
Q1 0.02
Q2 0.36
Q4 0.26
Q3 0.20
Q2 0.17
Q4 0.35
Q1 -0.45
Q2 0.28
Q1 0.23
Q3 0.07
EPS ANALYSIS¹ ($)
2015
2016
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
RECOMMENDATION
We rate GENERAL ELECTRIC CO (GE) a BUY. This is driven by some important positives, which we believe
should have a greater impact than any weaknesses, and should give investors a better performance
opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
revenue growth, compelling growth in net income, solid stock price performance, impressive record of
earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the
company has had generally high debt management risk by most measures that we evaluated.
HIGHLIGHTS
GE's revenue growth has slightly outpaced the industry average of 6.4%. Since the same quarter one year
prior, revenues slightly increased by 6.7%. Growth in the company's revenue appears to have helped boost
the earnings per share.
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500
and the Industrial Conglomerates industry. The net income increased by 312.5% when compared to the same
quarter one year prior, rising from -$1,360.00 million to $2,890.00 million.
Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also
clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a
role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has
already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel,
however, that the other strengths this company displays justify these higher price levels.
GENERAL ELECTRIC CO reported significant earnings per share improvement in the most recent quarter
compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently.
But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENERAL ELECTRIC CO
reported lower earnings of $0.18 versus $0.93 in the prior year. This year, the market expects an improvement
in earnings ($1.50 versus $0.18).
Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of
strength within the company. In comparison to the other companies in the Industrial Conglomerates industry
and the overall market, GENERAL ELECTRIC CO's return on equity is significantly below that of the industry
average and is below that of the S&P 500.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
Report Date: September 25, 2016
PAGE 1
September 25, 2016
NYSE: GE
GENERAL ELECTRIC CO
Sector: Industrials Industrial Conglomerates Source: S&P
Annual Dividend Rate
$0.92
Annual Dividend Yield
3.06%
PEER GROUP ANALYSIS
10%
GE
CSL
Price as of 9/22/2016
$30.04
AB
OR
ROP
LE
HON
MMM
Most industrial conglomerates draw a majority of revenue from overseas demand. Business is affected by the
fluctuation of the US dollar against other currencies. Due to globally diversified operations, conglomerates
are less vulnerable to economic upswings and downturns within a particular country.
The current trend is to divest poorly performing operations and focus on areas with higher growth potential.
Growth is also driven by low barriers to entry due to trade liberalization in emerging economies, availability of
lower cost resources overseas, and increased economies of scale. Many foreign countries lure
conglomerates with incentives such as tax exemptions, loans, use of property, and subsidies in exchange for
new technology, capital, and domestic growth.
UN
R
VO
FA
LE
AB
-25%
52-Week Range
$24.26-$33.00
The industrial conglomerates industry includes organizations that are engaged in multiple and eclectic
businesses. Major players are General Electric (GE), Siemens (SI), 3M (MMM), Tyco International (TYC), and
PhilipsElectronics (PHG). These companies operate in markets for aircraft engines, power generation, water
processing, security technology, medical imaging, and industrial products.
V
FA
PHG
Revenue Growth (TTM)
Market Capitalization
$269.2 Billion
INDUSTRY ANALYSIS
REVENUE GROWTH AND EBITDA MARGIN*
0%
Beta
1.12
RAVN
IEP
35%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $825.9 Million and $269.2
Billion. Companies with NA or NM values do not
appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
Rising cost of raw materials hurts industry performance. A lack of focus and the inability to manage unrelated
businesses are prevalent criticisms. Many diversified business units pose synergy challenges and often
result in inefficient operations. The market undervalues conglomerates, but from a financial perspective, it is
a scenario of reduced returns for lower risks. GE’s investors, who have been achieving nominal returns for
several years, finally drove top management to spin off its Consumer & Industrial business and focus on high
growth businesses such as jet engines, energy, and health care.
Adverse changes to interest rates, tax rates, tariffs, or regulations impact the industry. Global environmental
regulations have become more stringent. Companies incur increased capital costs for environmental
protection.
Industry outlook is positive as companies broadly benefit in the economic recovery. The US government
budget restrictions are offset by US consumer spending which helps conglomerates boost US revenue.
10%
REVENUE GROWTH AND EARNINGS YIELD
CSLGE
V
FA
AB
OR
PHG
ROP
HON
MMM
LE
AB
-25%
R
VO
FA
Revenue Growth (TTM)
LE
UN
IEP
-40%
RAVN
PEER GROUP: Industrial Conglomerates
Ticker
GE
HON
RAVN
IEP
CSL
PHG
ROP
MMM
Company Name
GENERAL ELECTRIC CO
HONEYWELL INTERNATIONAL IN
RAVEN INDUSTRIES INC
ICAHN ENTERPRISES LP
CARLISLE COS INC
KONINKLIJKE PHILIPS NV
ROPER TECHNOLOGIES INC
3M CO
Recent
Price ($)
30.04
116.83
22.84
49.86
102.70
29.83
182.13
179.85
Market
Cap ($M)
269,195
88,893
826
6,886
6,637
28,293
18,457
108,701
Price/
Earnings
35.76
18.49
87.85
NM
18.34
74.58
27.39
22.94
Net Sales
TTM ($M)
118,795.00
39,106.00
256.84
13,131.00
3,640.20
26,260.25
3,661.55
30,081.00
Net Income
TTM ($M)
11,887.00
4,926.00
9.24
-2,473.00
369.10
785.24
678.50
4,900.00
The peer group comparison is based on Major Industrial Conglomerates companies of comparable size.
10%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -23.5% and
9.5%. Companies with NA or NM values do not
appear.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
Report Date: September 25, 2016
PAGE 2
September 25, 2016
NYSE: GE
GENERAL ELECTRIC CO
Sector: Industrials Industrial Conglomerates Source: S&P
Annual Dividend Rate
$0.92
Annual Dividend Yield
3.06%
Beta
1.12
Market Capitalization
$269.2 Billion
52-Week Range
$24.26-$33.00
Price as of 9/22/2016
$30.04
COMPANY DESCRIPTION
General Electric Company (GE) operates as an
infrastructure and financial services company worldwide.
The company's 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. Its Renewable Energy segment provides wind
turbine platforms, and hardware and software; offshore
wind turbines; and solutions, products, and services to
hydropower industry. The company's Oil and Gas
segment provides turbomachinery solutions; surface and
subsea drilling and production systems, and equipment
for floating production platforms; measurement and
control products; and compressors, pumps, valves, and
natural gas solutions. Its Energy Management segment
offers industrial and grid solutions; and power
conversion systems. The company's Aviation segment
designs and produces commercial and military aircraft
engines, integrated digital components, electric power,
and mechanical aircraft systems; and provides
aftermarket services. Its Healthcare segment offers
diagnostic imaging and clinical systems; products and
services for drug discovery, biopharmaceutical
manufacturing, and cellular technologies; and healthcare
information technology products. The company's
Transportation segment provides freight and passenger
locomotives, parts, wreck repair, software-enabled
solutions, mining equipment and services, marine diesel
engines, and stationary power diesel engines and
motors, as well as overhaul, repair, and upgrade
services. Its Appliances & Lighting segment sells and
services home appliances; and manufactures, sources,
and sells lighting solutions. The company's Capital
segment offers commercial lending and leasing,
factoring, energy financial, and aircraft financing and
leasing services. General Electric Company was founded
in 1892 and is headquartered in Fairfield, Connecticut.
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of GE shares. It is provided in order to give you a deeper understanding of our rating
methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
GENERAL ELECTRIC CO
3135 Easton Turnpike
Fairfield, CT 06828
USA
Phone: 203-373-2211
http://www.ge.com
Employees: 333000
THESTREET RATINGS RESEARCH METHODOLOGY
FACTOR
SCORE
2.0
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, GE has a growth score better than 30% of the
stocks we rate.
strong
3.5
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 60% of the companies we
cover.
strong
3.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 50% of the companies we review.
strong
2.5
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 40% of the stocks we monitor.
strong
3.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 50% of the companies we analyze.
strong
4.5
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 80% of the companies we track.
strong
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
Report Date: September 25, 2016
PAGE 3
September 25, 2016
NYSE: GE
GENERAL ELECTRIC CO
Sector: Industrials Industrial Conglomerates Source: S&P
Annual Dividend Rate
$0.92
Annual Dividend Yield
3.06%
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
Beta
1.12
Market Capitalization
$269.2 Billion
52-Week Range
$24.26-$33.00
Price as of 9/22/2016
$30.04
FINANCIAL ANALYSIS
GENERAL ELECTRIC CO's gross profit margin for the second quarter of its fiscal year 2016 has increased
when compared to the same period a year ago. Sales and net income have grown, and although the growth in
revenues has outpaced the average competitor within the industry, the net income growth has not.
During the same period, stockholders' equity ("net worth") has decreased by 22.38% from the same quarter
last year.
0.32
1.50 E
1.70 E
Q3 FY16
2016(E)
2017(E)
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Q2 FY16
30,344.00
4,935.00
3,189.00
2,890.00
Q2 FY15
28,446.00
4,047.00
2,545.00
-1,360.00
Q2 FY16
57,349.00
401,461.00
156,435.00
84,991.00
Q2 FY15
97,262.00
610,926.00
315,963.00
109,503.00
Q2 FY16
33.35%
16.26%
10.51%
0.30
2.96%
9.65%
Q2 FY15
30.65%
14.22%
8.95%
0.18
-1.02%
1.18%
Q2 FY16
NA
0.65
1,326.00
2.41
Q2 FY15
NA
0.74
713.00
3.57
Q2 FY16
8,961
0.23
0.36
9.48
NA
33,852,823
Q2 FY15
10,096
0.23
0.17
10.85
NA
32,598,388
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
Report Date: September 25, 2016
PAGE 4
September 25, 2016
NYSE: GE
GENERAL ELECTRIC CO
Sector: Industrials Industrial Conglomerates Source: S&P
Annual Dividend Rate
$0.92
Annual Dividend Yield
3.06%
Beta
1.12
Market Capitalization
$269.2 Billion
52-Week Range
$24.26-$33.00
Price as of 9/22/2016
$30.04
BUY: $31.64
HOLD: $30.68
Price/Earnings
HOLD: $23.27
BUY: $27.77
2 Year Chart
HOLD: $27.02
VALUATION
BUY. This stock's P/E ratio indicates a premium compared to an average of 31.81 for the Industrial
Conglomerates industry and a significant premium compared to the S&P 500 average of 25.19. To use another
comparison, its price-to-book ratio of 3.17 indicates a premium versus the S&P 500 average of 2.82 and a
discount versus the industry average of 4.60. The current price-to-sales ratio is above the S&P 500 average,
but below the industry average.
BUY: $26.08
RATINGS HISTORY
Our rating for GENERAL ELECTRIC CO was recently
upgraded from Hold to Buy on 7/25/2016. As of
9/22/2016, the stock was trading at a price of $30.04
which is 9.0% below its 52-week high of $33.00 and
23.8% above its 52-week low of $24.26.
$35
$30
$25
2014
2015
1
2
3
premium
GE 35.76
Peers 31.81
• Premium. A higher P/E ratio than its peers can
signify a more expensive stock or higher growth
expectations.
• GE is trading at a premium to its peers.
Price/Projected Earnings
From
Hold
Buy
Hold
Buy
Hold
Buy
Buy
To
Buy
Hold
Buy
Hold
Buy
Hold
Buy
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
(as of 9/22/2016)
41.49% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
31.19% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
27.32% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
5
1
2
3
4
5
1
2
3
premium
4
5
Price/Sales
1
2
premium
3
4
5
Price to Earnings/Growth
4
5
discount
1
2
3
premium
4
5
discount
GE 0.05
Peers 0.96
• Discount. The PEG ratio is the stock’s P/E divided
by the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• GE trades at a significant discount to its peers.
Earnings Growth
1
2
3
4
lower
5
higher
GE 500.00
Peers 257.29
• Higher. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• GE is expected to have an earnings growth rate
that significantly exceeds its peers.
Sales Growth
discount
GE 2.27
Peers 2.55
• Discount. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• GE is trading at a discount to its industry on this
measurement.
3
GE 52.83
Peers 34.84
• Premium. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• GE is trading at a significant premium to its peers.
discount
GE 3.17
Peers 4.60
• Discount. A lower price-to-book ratio makes a
stock more attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• GE is trading at a significant discount to its peers.
2
premium
discount
GE 17.67
Peers 20.21
• Average. An average price-to-projected earnings
ratio can signify an industry neutral stock price and
average future growth expectations.
• GE is trading at a valuation on par with its peers.
Price/Book
1
Price/CashFlow
discount
premium
MOST RECENT RATINGS CHANGES
Date
Price
Action
7/25/16
$31.64
Upgrade
4/25/16
$30.68 Downgrade
10/7/15
$27.77
Upgrade
8/25/15
$23.27 Downgrade
7/20/15
$27.14
Upgrade
4/20/15
$27.02 Downgrade
9/22/14
$26.08 No Change
4
1
2
3
lower
4
5
higher
GE 9.46
Peers 4.06
• Higher. A sales growth rate that exceeds the
industry implies that a company is gaining market
share.
• GE has a sales growth rate that significantly
exceeds its peers.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
Report Date: September 25, 2016
PAGE 5