General Electric: A Positive Outlook, After The 'Reset' Of Course

Mar. 18, 2019 10:44 AM ETGeneral Electric Company (GE)21 Comments
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WG Investment Research


  • General Electric released its 2019 outlook material, and management called 2019 the "reset" year.
  • Management disclosed financial leverage targets for General Electric's industrial and financing businesses, and it expects the company's financial position to greatly improve by 2021.
  • I am long General Electric, and I plan to stay long the stock.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Start your free trial today »

General Electric (NYSE:GE) recently released its 2019 outlook and, as you can expect, the next year is going to be a long and challenging journey for this industrial conglomerate. Management called 2019 a "reset" year. The stock was initially down big after the outlook call, but shares recovered and finished the trading week higher by around 4%.

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While 2019 is projected to be a reset year, I believe that the bull case gets stronger the longer that you are able (and willing) to look out. Mr. Larry Culp, CEO, has communicated in great detail the challenges that his team will face in 2019 (with the Power struggles taking center stage), but I believe that nothing has stood out more than the focus that is being placed on GE's financial position, and rightfully so. In my mind, Mr. Culp's success will be largely tied to his ability to improve GE's leverage, and this is the reason why I have covered the topic several times in the recent past (see here for the latest example).

This article will include updated thoughts on GE's financial position based on the outlook material, and I will describe the plan that management laid out to put this company in a better financial position by 2021.

The Company Has Debt, On Debt, On Debt - But There Is A Plan

During the outlook call, Mr. Culp said that his number 1 priority was to run "the company with a higher cash balance and less reliance on short-term funding". GE's debt has been an issue for years now, so I am encouraged by the CEO's laser focus on reducing the company's financial leverage. To this point, management clearly identified financial targets for both GE Industrial (i.e., the industrial operating segments) and GE Capital.

Source: 2019

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This article was written by

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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, 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.

Additional disclosure: This article is not a recommendation to buy or sell any stock mentioned. These are only my personal opinions. Every investor must do his/her own due diligence before making any investment decision.

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