General Electric: The Healthcare Unit, By The Numbers

Jul. 13, 2018 5:10 AM ETGeneral Electric Company (GE)42 Comments
WG Investment Research profile picture
WG Investment Research


  • On July 20, General Electric will release what are expected to be lackluster Q2 2018 financial results.
  • Investors should be excited about the prospect of holding a position in GE Healthcare because this business unit has a promising setup heading into the spin.
  • I plan to stay long General Electric. How about you?

General Electric (NYSE:GE) is scheduled to release its Q2 2018 financial results on July 20, 2018, and analysts are calling for this industrial conglomerate to report adjusted EPS of $0.17 on revenue of $29.7B. For comparison purposes, the company reported adjusted EPS of $0.28 on revenue of $29.5B in the same period of the prior year.

Anyone that follows GE should not be surprised by the expectations for this company to report a significant YoY decline in earnings but what I do find a little surprising (in a positive way) is the fact that some analysts are actually starting to tone down their bear cases for GE. For example, a notable GE bear, Deutsche Bank’s (DB) Nicole DeBlase, recently moved her GE rating from Sell to Hold. She wrote that GE is “taking bold actions to reshape/simplify the portfolio” and that the company’s stock is attractively priced based on her sum-of-the-parts valuation of $16.

There are plenty of reasons why I believe that GE is a buy-to-hold investment at today’s price but I am going to spend a few minutes talking about the upcoming catalyst that has the potential to unlock a tremendous amount of shareholder value in the years ahead – that is, the upcoming GE Healthcare spin-off.

GE Healthcare, By The Numbers

Mr. John Flannery, CEO, and team recently disclosed their intentions to spin off GE Healthcare in what is being viewed as a direct attempt to unlock shareholder value.

Spinning off the healthcare division provides plenty of benefits to the parent company (i.e., reducing financial leverage, streamlining operations, etc.) but, in my opinion, the opportunity to own the standalone healthcare division should now be viewed as an important component of investors' investment thesis. The soon-to-be standalone company will take on approximately $18B in debt/pension obligations but GE Healthcare should have no issues servicing these liabilities.

ChartILMN Revenue (Annual) data by YCharts

ChartILMN P/E Ratio (Forward) data by YCharts

This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long GE, BHGE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (42)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.