General Electric Company shares fell by -2.1% during the day's afternoon session, and are now trading at a price of $106.34. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
General Electric Company operates as a high-tech industrial company in Europe, China, Asia, the Americas, the Middle East, and Africa. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, General Electric Company has a trailing 12 month P/E ratio of 11.1 and a P/B ratio of 4.04.
General Electric Company's PEG ratio is 1.49, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $113,543 | $113,543 | $58,025 | $56,469 | $58,100 | $62,483 |
| Gross Margins | -6% | 18% | -13% | -15% | -3% | 0% |
| Operating Margins | -18.0% | 0.0% | -11.0% | -9.0% | -1.0% | 15.0% |
| Net Margins | 0.0% | 0.0% | 10.0% | 0.0% | 1.0% | 16.0% |
| Net Income (MM) | -$89 | $66 | $5,704 | -$71 | $407 | $9,899 |
| Net Interest Expense (MM) | $2,321 | $2,479 | -$948 | $2,696 | $1,172 | $9,123 |
| Depreciation & Amort. (MM) | $5,562 | $2,018 | $1,895 | $3,645 | $1,338 | $1,500 |
| Earnings Per Share | -$2.62 | -$4.99 | $4.64 | -$6.0 | $0.05 | $8.67 |
| Diluted Shares (MM) | 8,691 | 1,091 | 1,094 | 1,098 | 1,096 | 1,092 |
| Free Cash Flow (MM) | -$13,947 | -$3,359 | -$17,407 | -$22,341 | -$4,975 | -$6,301 |
| Capital Expenditures (MM) | $18,925 | $12,197 | $20,818 | $25,822 | $10,891 | $12,438 |
| Net Current Assets (MM) | -$145,781 | -$141,686 | -$134,285 | -$112,143 | -$95,554 | -$70,425 |
| Long Term Debt (MM) | $225,843 | $218,525 | $142,580 | $109,139 | $87,453 | $68,879 |
| Net Debt / EBITDA | -13.17 | 103.63 | -28.3 | -89.47 | 155.9 | 6.84 |
General Electric Company suffers from declining revenues and decreasing reinvestment in the business, slimmer gross margins than its peers, and consistently negative margins with a positive growth rate. The firm's financial statements also exhibit an unconvincing cash flow history and a highly leveraged balance sheet. On the other hand, the company has a strong EPS growth trend working in its favor.
