General Electric (GE) is usually seen as an undervalued company as its stock price has been down for a few years. Particularly in the last decade, the company lost a market value of 48% as its share price plunged from $37.25 to $18.77. General Electric might not offer much for growth investors but it still offers a lot to many others. In this article, I will compare GE's organic growth with its share price movements in the last decade.
Price vs. Earnings Per Share
10 years ago, the company earned 25 cents per share, whereas it earns 35 cents per share. This is an earnings growth of 40% in the last decade. This is definitely greater than the company's stock price growth.
click to enlarge
Price vs. Revenues
In the last decade, the company's revenues increased from $30.52 billion to $37.97 billion. While this growth of 24% is not impressive, it is still above the stock price growth of the company.
Price vs. Free Cash Flow
Ten years ago, GE's free cash flow was $2.04 billion. Today it is $7.70 billion. This is one of the more impressive growths GE has accomplished in the last decade. The growth of free cash flow in the last decade was 278%, which is definitely not reflected in the stock price of the company.
Price vs. Book Value
General Electric's book value increased from $55.17 billion to $118.10 billion in the last decade. This is a growth of 114.06%, not reflected by the stock price.
Because of the changes in the company's book value and price in opposite directions, the company's price to book value moved from 6.74 to 1.72 in the last decade.
I would say that General Electric is either fairly valued or slightly undervalued. I would like to give the company credit for its commitment to high dividends over the years and it's been making progress in paying off its debt since 2008. I would rate GE as buy for long term investors and dividend investors, however short term and growth investors would be better off by staying away from this stock.