A Look At How General Electric Is Positioned, Financially

Nov. 12, 2018 2:41 PM ETGeneral Electric Company (GE)54 Comments
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WG Investment Research


  • A well-known General Electric bear recently lowered his price target for GE from $10 to $6, which caused shares to drop by over 5%.
  • I will take a deep dive into General Electric's Q3 2018 10-Q and provide my thoughts on how I view this conglomerate positioned from a financial standpoint.
  • I am long General Electric and I plan to stay long the stock. However, GE shares may not be worthy of your investment dollars.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Get started today »

General Electric's (NYSE:GE) stock is at multi-year lows as GE shares are quickly approaching levels not seen since the Financial Crisis.

ChartGE data by YCharts

This storied industrial conglomerate is facing stiff headwinds related to the downturn in the Power industry but GE's management team is also contending with several self-inflicted wounds (i.e., SEC/DOJ investigations, goodwill charges, and the list goes on). As a direct result, the market is extremely bearish about the company's near-term prospects and the poor sentiment is wreaking havoc when it comes to the stock price.

It does not help that the bears are roaring louder than ever, and rightfully so. To this point, JPMorgan's Stephen Tusa released another bearish investor note on GE and lowered his price target from $10 to $6. Mr. Tusa talked down GE's most recent earnings results but his bearish thesis largely revolved around the company's poor financial position and its liquidity.

Mr. Tusa has been on point with his calls on GE over the last two years, so I am not in the position to try to refute his bearish arguments in this article. Instead, I will dig into the numbers from the most recent quarterly report and provide my thoughts on where I view GE currently stands from financial standpoint.

A Look At General Electric's Financial Position And Liquidity

To start, Mr. Tusa has been right on almost all fronts when it comes to General Electric over the last two years, so every investor, including myself, should seriously consider all that he has to say about this company. Again, in this article, I will simply provide my thoughts on GE's financial position, liquidity, and capacity to take on additional leverage. To do this, I will mostly use the Management Discussion & Analysis ("MD&A") section of the Q3 2018 10-Q

ChartGE Cash and Equivalents (Quarterly) data by YCharts

ChartGE Cash and Equivalents (Quarterly) data by YCharts
ChartGE Cash and Equivalents (Quarterly) 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, HON, BHGE, UTX. 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.

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