4/25/2011

Long-Term Financial Analysis of General Electric (NYSE:GE)

Here is a short 10-Year analysis of General Electric (NYSE:GE). The article gives investors an overview of the company’s financial history, business diversification as well as the valuation level and dividend policy.

Company Profile:
General Electric (NYSE:GE) is the world's largest diversified conglomerate. It operates within several industries with a major focus on industrial goods, financial services and electric technologies. Finally GE has minor engagements in the diversified entertainment industry. GE accounts operations in five business divisions: Energy Infrastructure (25 percent of sales and 37 percent of earnings), Technology Infrastructure (26 percent of sales and 32 percent of earnings), NBC Universal (11 percent of sales and 12 percent of earnings), GE Capital (32 percent of sales and 17 percent of earnings) as well as Home and Business Solutions (6 percent of sales and 2 percent of earnings). On January 2011, General Electric sold its business unit NBC Universal to Comcast (NYSE:CMSA) for USD 6.2 billion in cash and a remaining 49 percent stake in the new formed entity NBCU LLC.

The company employs about 300,000 people and has operations in more than 100 countries. As of fiscal 2010, 53 percent of sales came from abroad.

Valuation of the Company:
Dividend Yield: 2.8 Percent
Payout Ratio: 48.6 Percent
5-Year Dividend Growth: -2.71 Percent

Market Capitalization: 211 billion
Cash and Short Term Investments: 78.958 billion
Long-Term Debt: 360.681 billion

Cash flow from Operations: 36.123 billion
CAPEX: 9.800 billion

Long-Term Fundamentals and Estimates:
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Sales of GE increased with 18.13 percent over the past decade. Earnings before taxes and interest (EBIT) declined by 27.88 percent and net income finally grew in total -10.65 percent. 








GE paid dividends since 1899. Due to the strong dividend cut in 2009, GE lost its title as Dividend Champion and counts now zero consecutive years of dividend increasing. The next ex-div. Date is June 16, 2011. Payments will be received on July 25, 2011.

Competitors:
General Electric is major diversified and has in every division several competitors. On group perspective, rivals like German Siemens (NYSE:SI) and Swiss ABB (NYSE:ABB), which has strong operations in the electrical equipment industry, are near competitors. MMM (NYSE:MMM), Emerson Electric (NYSE:EMR) and aerospace focused company Honeywell (NYSE:HON) are rivals too. For a detailed view of the conglomerate industry take a look at my research about five high yielding conglomerates.

Consensus Developments:
In accordance to Reuters, 18 analyst covered GE and submitted an outperform rating with a mean target price of USD 23.21 as of April 24, 2011. This value represents an upside of 16.3 percent compared to the close end price of April 21, 2011. The mean target price estimate for GE increased over the past 18 month by 36 percent.

Related Stock Ticker Symbols:
GE, SI, ABB, MMM, HON, EMR

Full Disclosure: Long GE

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Disclaimer:
The presented data and material is for informational purposes only. Despite careful researches, we cannot guarantee for the truth of the figures. The past operational performance as well as the stock performance and dividend developments does not guarantee a positive future performance. Please, before you buy or sell any stocks, you should do your own research and reach your own conclusion.

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