S&P’s risk assessment views GE’s long-term record of steady growth in earnings, cash flow and dividends, which they attribute to good management of a diversified portfolio of growing and profitable businesses. This opinion is offset by recent financial market turmoil, which has caused GE to access the capital markets.
Why buy now?
Higher revenues from energy and technology infrastructure, a healthy cash position and new contracts are why. GE is to service and maintain 2 power plants and signed a 25 year contract with Honeywell for production of Airbus A350XWB’s air management and conditioning system.
S&O’s Quantitative Evaluation of GE’s quality ranking is A (A+ is the highest rank)
GE’s S&P relative strength rank is a weak 30 (out of 100)
S&P risk caveat: “Risks to our recommendation and target price include the possibility of a deeper than expected global recession, as well as greater than expected credit losses in Capital Finance.”
PEG Ratio is a Good Measure to Evaluate GE
GE seems inexpensive with a PEG value of 0.6403, below the Conglomerates industry median PEG of 0.95, which is supported by a PE of 5.9459 that is way below the industry median of 10.34.
I disagree with TheStreet, S&P, Ford Quity Research and Markedge who, in essence, all rate this stock a hold.
So today I am going to add a buy at $10 for 1/4 of my GE position goal.