General Electric Co (NYSE: GE)

Sector: Industrials Industry: Aerospace & Defense CIK: 0000040545
Market Cap 342.94 Bn
P/B 18.23
P/E 42.54
P/S 7.80
ROIC (Qtr) 18.35
Div Yield % 0.42
Rev 1y % (Qtr) 23.77
Total Debt (Qtr) 20.84 Bn
Debt/Equity (Qtr) 1.11

About

Price action

Investment thesis

Bull case

  • Healthy cash reserves of 12.50B provide 6.05x coverage of short-term debt 2.07B, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 114.92B provides 5.51x coverage of total debt 20.84B, indicating robust asset backing and low credit risk.
  • Tangible assets of 114.92B provide exceptional 6.41x coverage of deferred revenue 17.91B, showing strong service capability backing.
  • Robust free cash flow of 6.53B exceeds capital expenditure of 1.02B by 6.40x, indicating strong organic growth funding capability.
  • Strong operating cash flow of 7.55B provides 1.78x coverage of SG&A expenses 4.25B, showing efficient operational cost management.

Bear case

  • Operating cash flow of 7.55B barely covers its investment activities of (1.14B), with a coverage ratio of -6.64, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (1.14B) provide weak support for R&D spending of 1.52B, which is -0.75x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 7.55B provides thin coverage of dividend payments of (1.38B) with a -5.49 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 7.55B provides insufficient coverage of deferred revenue obligations of 17.91B, which is 0.42x, raising concerns about future service delivery capabilities.
  • Long-term investments of 38.16B represent a high 5.02x of fixed assets 7.61B, indicating potential overexposure to financial assets versus operational capabilities.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Aerospace & Defense
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GE General Electric Co 342.94 Bn 42.54 7.80 20.84 Bn
2 RTX RTX Corp 252.05 Bn 38.24 2.93 40.71 Bn
3 BA Boeing Co 174.43 Bn -17.16 2.16 53.35 Bn
4 LMT Lockheed Martin Corp 126.61 Bn 30.15 1.73 22.19 Bn
5 GD General Dynamics Corp 95.62 Bn 22.69 1.86 8.01 Bn
6 NOC Northrop Grumman Corp /De/ 89.30 Bn 22.22 2.18 16.96 Bn
7 HWM Howmet Aerospace Inc. 88.16 Bn 60.80 11.05 3.19 Bn
8 TDG TransDigm Group INC 80.97 Bn 43.39 9.17 30.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.74 3.58
EV to Cash from Ops. EV/CFO 46.47 58.38
EV to Debt EV to Debt 16.84 98.04
EV to EBIT EV/EBIT 34.11 19.42
EV to EBITDA EV/EBITDA 37.04 33.60
EV to Free Cash Flow [EV/FCF] EV/FCF 53.73 91.66
EV to Market Cap EV to Market Cap 1.02 1.13
EV to Revenue EV/Rev 7.99 11.27
Price to Book Value [P/B] P/B 18.23 4.81
Price to Earnings [P/E] P/E 42.54 31.79
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.85 -3.75
Dividend Payout Ratio % Div Payout % (Qtr) 18.00 22.95
Dividend per Basic Share Div per Share (Qtr) 1.36 0.70
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 22.08 14.15
Interest Coverage Int. cover (Qtr) 12.59 -18.00
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -12.57 -50.32
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -8.91 1,609.43
Dividend Growth (1y) % Div 1y % (Qtr) 47.83 0.75
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 23.01 -30.98
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 74.83 10.65
EBIT Growth (1y) % EBIT 1y % (Qtr) 23.41 -26.90
EBT Growth (1y) % EBT 1y % (Qtr) 29.52 -27.25
EPS Growth (1y) % EPS 1y % (Qtr) 31.71 -99.21
FCF Growth (1y) % FCF 1y % (Qtr) 15.69 6.61
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 22.47 -5.55
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.34 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.16 0.07
Cash Ratio Cash Ratio (Qtr) 0.34 1.76
Current Ratio Curr Ratio (Qtr) 1.08 3.72
Debt to Equity Ratio Debt/Equity (Qtr) 1.11 0.07
Interest Cover Ratio Int Coverage (Qtr) 12.59 -18.00
Times Interest Earned Times Interest Earned (Qtr) 12.59 -18.00
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 26.20 -345.84
EBIT Margin % EBIT Margin % (Qtr) 23.41 -382.63
EBT Margin % EBT Margin % (Qtr) 21.55 -387.93
Gross Margin % Gross Margin % (Qtr) 37.70 -33.31
Net Profit Margin % Net Margin % (Qtr) 18.30 -389.13