Ever wondered if General Electric's remarkable run means there is still value left to capture, or if you might be jumping in when the price has already soared?
The stock has climbed an impressive 77.0% year-to-date and is up 64.9% over the past year, though it has dipped slightly by 4.0% in the last month.
Recent headlines highlight General Electric's progress on restructuring into leaner, more focused businesses, alongside growing buzz in the industrial sector about sustained infrastructure investment and renewable energy initiatives. These developments have caught the attention of investors and helped fuel both optimism and debate about what is next for the company.
At first glance, General Electric scores just 0 out of 6 on our valuation checklist, suggesting it may not look undervalued by traditional metrics. As we break down the various ways to value a business, you will see why a deeper look at the company's story could be even more revealing.
General Electric scores just 0/6 on our valuation checks.
Approach 1: General Electric Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow (DCF) model projects a company's future free cash flows and then discounts them back to their present value, giving investors an estimate of what the business should be worth today. This helps answer whether the current share price reflects the company's true long-term value.
For General Electric, the most recent free cash flow reported stands at $6.45 Billion. Analyst forecasts suggest this figure will continue to grow, with consensus estimates reaching $10.59 Billion by 2029. Only the first five years are informed by direct analyst input, while further projections are extrapolated based on trends by Simply Wall St. These cash flows are all calculated in US dollars.
When all of these estimated and extrapolated cash flows are discounted back to the present, the DCF model places General Electric's intrinsic value at $221.21 per share. This value is 34.9% higher than the current share price, indicating that the stock is considered overvalued on a purely cash flow basis.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests General Electric may be overvalued by 34.9%.
Approach 2: General Electric Price vs Earnings
The Price-to-Earnings (PE) ratio is often the go-to valuation tool for profitable companies like General Electric. The PE ratio allows investors to gauge how much they are paying for each dollar of company earnings, which is a key measure when a business is consistently generating profit.