GE
General Electric Co.
Industrial/Transportation
03/21/2023
Presented
| Date | 03/14/2023 |
| Price | $91.17 |
| Market Cap | $99.31B |
| Ent Value | $103.14B |
| P/E Ratio | N/A |
| Book Value | $33.39 |
| Div Yield | 0.29% |
| Shares O/S | 1,089.29M |
| Ave Daily Vol | 7,891,925 |
| Short Int | 1.39% |
Current
| Price | $190.57 |
| Market Cap | $206.64B |
| General Electric Co. engages in the provision of commercial and military aircraft engines and systems, wind, and other renewable energy generation equipment and grid solutions, and gas, steam, nuclear, and other power generation equipment. It operates through the following segments: Aviation, Healthcare, Renewable Energy, and Power. The Aviation segment designs and produces commercial and military aircraft engines, integrated engine components, electric power and mechanical aircraft systems. The Healthcare segment provides essential healthcare technologies to developed and emerging markets and has expertise in medical imaging, digital solutions, patient monitoring and diagnostics, drug discovery and performance improvement solutions. The Renewable Energy segment’s portfolio of business units includes onshore and offshore wind, blade manufacturing, grid solutions, hydro, storage, hybrid renewables and digital services offerings. The Power segment serves power generation, industrial, government and other customers worldwide with products and services related to energy production. The company was founded by Thomas Alva Edison in 1878 and is headquartered in Boston, MA. |
Publicly traded companies mentioned herein: Boeing Co/The (BA), General Electric Co (GE), Raytheon Technologies Corp (RTX), Safran SA (SAF FP)
Highlights
The presenter is long shares of General Electric Co (GE), which has been an underperformer over the last decade due to a wide range of issues including former CEO Jeff Immelt’s spare private jet that would follow his flights and the company’s history of excessive conglomeration that set GE up for failure. In recent years, the focus has been on winding down, divesting, and spinning off various businesses, and that effort is almost complete. The two remaining segments are a best-in-class aerospace engine business (GE Aerospace) and an energy business (GE Vernova), the latter of which consists of the legacy GE gas turbine business (power) and a renewable energy business (onshore & offshore wind). Management has laid out its intention to spin off GE Vernova in early 2024, leaving GE as a pure-play aerospace engine business. Given his belief that GE Aerospace is the best aerospace engine business in the world, it should trade at a premium to Safran’s low-20x FCF multiple. He views a 25x multiple on RemainCo as reasonable, but the entire company is currently trading at 15x his projected 2025 GE Aerospace FCF of $6.5B – $7B. That also assigns zero value to GE Vernova, which could be worth $30B – $50B.
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