BUY
Investment Recommendation | March 2, 2015 | GE
General Electric Co.
Ticker
GE
Price
$25.99
Target
$30.00
Industry
Industrials
52-Wk Range
$23.41 – $27.53
Sub-Sector
Industrial Conglomerates
Market Cap
$261.5B
Beta
1.34
P/E
17.3
Revenue
$148.6B
EBITDA
$29.4B
Div. Yield
3.90%
Business Description
§  General Electric (GE) is a multi-industry infrastructure and financial services company.
§  General Electric reports its operations in eight different segments: Power & Water, Oil & Gas, Energy Management,
Aviation, Healthcare, Transportation, Home & Business Solutions and GE Capital.
§  General Electric’s sales by region in 2013 were U.S. 47%, Europe 17%, Pacific Basin 18%, Americas 9%, and Middle
East, and Africa 9%.
Revenue Breakdown by Segment
(Percent of Revenue)
Power & Water
Oil & Gas
17%
11%
5%
15%
4%
12%
Company
Revenue
P/E
3M Company
$31.67B
22.3
Aviation
Honeywell International Inc.
$40.31B
18.3
Healthcare
Siemens Ag
$72.01B
15.6
Home & Business Solutions
ABB Ltd
$41.11B
17.9
GE Capital
United Technologies Corp.
$65.10B
16.8
Energy Management
30%
6%
Comparable Companies Analysis
Transportation
Recommendation Summary
§  GE is on track for its goal of shrinking and restructuring GE Capital to only account for 25% percent of its
revenue by 2016. This move is part of GE change of focus to Industrials and cost, and the present day result is
downward pressure on GE’s EPS growth.
§  The focus on Industrials and shrinking of GE Capital will earn a higher industrial level P/E in the long run.
§  GE director W. Geoffrey Beattie bought 800,000 GE shares for $20,096,000 for an average of $25.12 per share
on Feb. 18 and 19.
§  GE’s focus on cost has helped drive Industrial profit growth to the 15% – 20% range.
§  GE Power & Water is in the process of acquiring the Thermal, Renewables, and Grid businesses of Alstom that
generate a collective $13.7B in revenue for $13.5B the deal is expected to close mid-2015.
§  The market is focusing on the downward EPS revisions that are as a result of GE Capital’s shrinking and
restructuring and is missing what is taking place on the industrial side.
1-Year Stock Price Performance
3-Month Stock Price Performance
28
27
26
26
25
24
24
22
20
Mar-14
23
Jun-14
Sep-14
Dec-14
Source: Capital IQ,Yahoo Finance, Company public filings
Note: Market data as of close on March 2, 2015.
Spring 2015 | Jacob Ardis
22
Dec-14
Jan-15
Feb-15