Entering text into the input field will update the search result below

GE: Wait For $4, Then Buy

Jun. 01, 2020 9:44 AM ETGeneral Electric Company (GE)60 Comments
Value Growth Master profile picture
Value Growth Master


  • GE is now struggling on all fronts as the pandemic batters GE Aviation, its primary profit driver.
  • Outlook is bleak and recovery in Aviation along with Power and Renewables will be painful and slow over a period of at least several years.
  • Yet, GE still has a portfolio of important businesses with upside potential.
  • Turnaround is possible (and likely) and GE is still an investable company, but only at a lower valuation.

GE's (NYSE:GE) collapse has been well documented, but as of late, under new management, the company has been making strides to turn around the struggling conglomerate. However, these efforts have all been destroyed by COVID-19, sending shares to their lowest levels in the century.

With shares at such depressed levels, investors may view GE as a clear value opportunity given the sheer size and prominence of its businesses. However, the picture is not as clear. The COVID-19 pandemic has battered its most valuable and profitable business segment, Aviation, and much of its remaining businesses are losing money. GE Healthcare, though benefiting from a surge in pandemic-related products, has been hit in other areas as hospital priorities shift away from elective procedures. The result of these factors is a seriously troubled business that is burning through cash with little recovery prospects in the short-term. Although a turnaround is definitely possible - in fact I believe GE has the right team in place that is taking the right steps towards righting the ship - it will be much slower than previously expected and more painful for shareholders. Thus, investors should wait for a lower valuation before investing in GE.

Core Issues Linger, But GE Was On The Right Track

Even before COVID-19, GE was plagued with a laundry list of problems driven by years of mismanagement. Nowhere else was this more clear than at GE Power where plunging power prices and a disastrous $14 billion acquisition destroyed a once storied business that today has a negative profit margin of 3.2%. The fall of GE Power, once GE's largest business segment, has been swift and is a symbol of years of mismanagement.

New CEO Larry Culp was tasked with reversing years of problems, and since taking over in 2018, he has taken decisive action to

This article was written by

Value Growth Master profile picture
I am a motivated investor who seeks to find undervalued stocks that have strong potential for solid future growth. My focus is on mid-and large-cap companies that have strong fundamentals that allow it to consistently deliver high capital returns over the long-term.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

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.