General Electric - Should We Buy GE Stock - is GE Stock a Good Buy Today | Summary and Q&A

TL;DR

This video discusses the current state of General Electric (GE) and analyzes whether it is a good buy in terms of its business performance, debt reduction, and cash flow improvements.

Key Insights

• 🤨 Accusations of fraud against GE by Harry Markopolos lack strong evidence, and the presence of reputable board directors raises doubts about his claims.
• 💪 GE's aviation business is crucial for its success and is expected to remain strong despite challenges like the grounding of Boeing planes.
• 👨‍💼 Debt reduction and improved cash flow are positive indicators of GE's ongoing business turnaround.
• 💳 GE's credit rating has declined in recent years, but if they continue reducing debt and improving cash flow, credit stability and potential improvement can be anticipated.
• 🍉 While there is long-term potential for GE stock, cautious investors may prefer to wait for a further decrease in price.
• 📪 Red flags associated with fraud should be considered during investment research.

Transcript

hi I'm Jimmy in this video we're looking at General Electric ticker symbol GE or go with this video is to get an idea of what general electrics business is and to see if GE could be a good buy today and hopefully if they are well this could help improve our overall investment portfolios performance okay so let's start with the most obvious problem ... Read More

Questions & Answers

Q: What were the allegations made against General Electric by Harry Markopolos, and why were they met with skepticism?

Harry Markopolos claimed that GE was a fraud, hiding $29 billion in insurance liabilities. However, his lack of substantial evidence and his financial incentive to profit if GE stock fell cast doubt on his allegations.

Q: What is the breakdown of GE's revenue by business segment, and which business line is crucial for GE's performance?

GE's largest business line is GE aviation, accounting for approximately 60% of operating income. While other sectors have struggled, such as power and healthcare, GE aviation is expected to remain strong.

Q: How has GE been addressing its debt and cash flow issues?

GE has been actively reducing debt, which has shown improvement in recent quarters. Cash flow has also increased steadily, indicating a positive sign for the long-term sustainability of the business.

Q: What is the fair value of GE stock, and what factors should be considered before investing?

Fair value calculations suggest a range of $11 to $13 per share based on forward price-to-earnings (P/E) ratios. However, considering ongoing SEC scrutiny and uncertainties around the business turnaround, a conservative approach suggests waiting for a further decrease in stock price.

Summary & Key Takeaways

• Harry Markopolos accused GE of being a fraud due to misleading insurance liabilities, but lack of hard evidence raises doubts. Assuming GE is not a fraud, its board of directors being reputable makes the claim questionable.

• GE stock pulled back after Markopolos' report but has since recovered. GE aviation, the largest business line, is crucial for its success, accounting for 60% of operating income.

• GE's power business has struggled, but recent stabilization and the sale of GE healthcare's biopharma division indicate positive changes. Debt reduction and increased cash flow are signs of GE's ongoing turnaround.