GE Stock Analysis - BUY GE Stock Today?

TL;DR

General Electric (GE) is planning to spin off its business into three separate companies (healthcare, power, and aerospace) to unlock value, with GE Healthcare expected to be the first spin-off in 2023. Using different valuation methods, the fair value estimate for GE stock ranges from $79 to $118 per share.

Transcript

hi i'm jimmy in this video we're looking at general electric ticker symbol ge so we're going to look at the basics of ge's business then we're going to try to come up with a fair value for ge stock to see if ge is worth buying today so let's jump into their business so ge's business is broken into three primary segments their largest segment is the... Read More

Key Insights

• 👨‍💼 GE is undergoing a strategic transformation by spinning off its business segments to unlock value.
• 😷 GE Healthcare has a diverse product portfolio for medical equipment and holds a significant backlog, demonstrating strong business prospects.
• ✊ GE Energy's backlog in renewables and power indicates a potential for future revenue growth in the GE Vernova spin-off.
• 😀 GE Aviation (soon to be GE Aerospace) has been a reliable revenue generator historically, but it faced challenges in 2020 due to the pandemic.
• 🧡 Using different valuation methods, the fair value estimate for GE stock ranges from $79 to $118 per share.
• 🎮 The website mentioned in the video aims to provide comprehensive valuation methods for different companies, tailoring the analysis to specific industry dynamics.

Questions & Answers

Q: What is the rationale behind GE's decision to spin off its business segments?

GE is aiming to unlock value by breaking its conglomerate structure, as individual businesses are often worth more separately than combined. This strategy is known as the conglomerate discount.

Q: What are the expected ticker symbols for GE's spin-off companies?

The expected ticker symbols are GEHC for GE Healthcare, GE for GE Aerospace, and GE+ for GE Energy (to be confirmed).

Q: How does GE Healthcare's backlog contribute to its future prospects?

The backlog indicates strong demand for GE Healthcare's products, as hospitals tend to order in large quantities. With a backlog of almost $15 billion, it provides a positive outlook for future revenue growth.

Q: What challenges does GE Energy's renewables and power segments face?

GE Power has struggled, while GE Renewables has shown gradual growth. The overall trend leans toward lower revenue, emphasizing the need to improve the performance of the GE Vernova business. Analysts expect revenue to gradually rise in the coming years.

Summary & Key Takeaways

• GE is dividing its business into three segments: power (45% of revenue), aviation (30% of revenue), and healthcare (25% of revenue).

• The company plans to spin off its healthcare business (expected ticker symbol GEHC) in early 2023, followed by power and aerospace.

• GE Healthcare produces a range of medical machines for hospitals and generates significant revenue with a backlog of $15 billion.

• GE Energy, combined with renewables and digital businesses, is expected to spin off in 2024 and has a backlog of $100 billion.

• GE Aviation, soon to be called GE Aerospace, has shown consistent revenue growth, though it faced a dip during the pandemic.